Future Roles for Natural Gas in Decarbonising the Australian ElectricitySupply within the NEM: Total System Costs are Key

摘要

Electricity systems around the world are changing, with the Paris Agreement of 2015 a catalyst for much ofthis current change.1 The Australian Government ratified this agreement, by commiting to 26-28% emissionsreductions below 2005 levels by 2030.2 Additionally, State governments are adopting more ambitious targetsto increase variable renewable energy and focusing on net emissions reductions, while the Australian EnergyMarket Operator (AEMO) warns of power instabilities and load shedding3. Given the difficulties in reducingemissions in other sectors, reductions in emissions from electricity generation has become the focus of thesetargets. Natural gas is often referred to as a ‘transition fuel’ towards a low emissions future, but this requiresthat it is in abundance and cost competitive. While the majority of the electricity generated in the NationalEnergy Market (NEM) is coal-based, a vast majority of these plants are due to retire gradually betweennow and 2050, and this generation loss will need to be replaced in the context of low emissions aspirations.How this is done has significant implications for how much the system will cost, with natural gas playinga pivotal role. In order to decarbonise the grid to meet targets, while building firm, dispatchable generationcapacity to support the system, a new metric is required to measure success. The changing generation mix, along with the need to maintain a competent grid, is resulting in previouslyacceptable cost comparison metrics being used outside of their limited range of applicability. Electricitygeneration facilities do not only provide energy, they also provide an array of additional services which arefundamental to maintaining a permanent and reliable electricity supply across the system. These services,corresponding costs and operational implications need to be included in the evaluation of technologies inorder to ensure the grids emerge transformed, resilient and genuinely sustainable. Total System Cost is themost appropriate economic metric for analysis and decision making in a future, low emissions grid.