Opinion: why gas has more grunt than wind

May 20th, 2016

There is a reason South Australia has the nation’s highest electricity prices – and it is all about wind.

In adopting the country’s most rapid take-up of wind farms, SA has delivered higher prices for consumers.

Across the nation, there is an understanding that a transition to more renewable energy is an essential element of our society’s future sustainability.  The question is how fast, and at what cost to consumers?

Energy network owners and operators around the globe are wrestling with this conundrum and many met to discuss the challenges in Adelaide this week at the Energy Networks Association’s annual conference.

Successive SA Governments have been strong supporters of responsible development of oil and gas resources.  Now the word ‘responsible’ is being taken to mean including subsidised development of alternative energy sources – and the question of ‘how much’ is where the argument starts.

The SA Opposition has questioned the current Government’s policy settings.

Shadow Energy Minister Dan van Holst Pellekaan describes an “over-zealous rush into wind farms” as a mistake.

“There is a place for a healthy component of sustainable energy in the South Australian market but it must be in balance,” he said in a media release this week, going on to say:

“We should have as much renewable energy generation as possible, but until that energy can be stored there is a point beyond which we cannot go without it destabilising the market and leading to increased prices.”

Taking a broader look at the path forward, the US example is relevant.  There, manufacturing has boomed in recent years because of the dramatic uptick in utilisation of natural gas from shale rock.  Business and consumer power costs have dropped for the same reason.

The additional sweet spot about this is that the environment has been a winner too, as carbon emissions have fallen due to the replacement of coal with gas in generator furnaces.

This is the essence of the case for natural gas as a transition fuel to a renewable energy future.

Back in Adelaide, Energy Networks Association CEO John Bradley identified rooftop solar with battery storage as the biggest dynamic.

However, the customer desire to grab solar power has to be balanced with the simultaneous demand for “the safe and reliable electricity and gas services that customers care about”.

Then there are the industrial and business users who need gas to survive, and who are currently facing what the ACCC has described as a potential supply crunch, particularly on Australia’s east coast.

To satisfy all market segments, we need more development of natural gas resources.

Also speaking at the Adelaide conference, Gas Energy Australia (GEA), the Victorian Automobile Chamber of Commerce (VACC) and the Australian Taxi Industry Association (ATIA) combined to discuss the prospects establishing a manufacturing base for liquefied petroleum gas (LPG) fuel conversions for passenger vehicles.

Autogas could provide a low-emission, cost-effective solution for fleet operators, once the car manufacturing industry closes next year, they said.

Steering down the same track, the Victorian Government sponsored a six-month trial of cutting-edge SVI LPG hybrid engines. The trial of  taxis equipped with the autogas engines found carbon reduction of 14.5 per cent when compared with the petrol-electric hybrid.

This kind of innovative approach – and the emissions reduction it achieves — underlines the opportunity for greater use of gas, both as a replacement for coal in power generation and for petrol in transport.

It is the very concept that many engineers are looking at in developed Asian countries such as China, Japan and Korea which are major customers for Australia’s rapidly growing gas (LNG) export industry.

And this is the key to Australia’s genuine potential to contribute to global emissions reduction.

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