The Australian electricity sector is in transition to a future with net zero emissions. APGA engaged Frontier Economics to develop a robust and approachable evidence base on the role of gas-powered generation in that transition. This study shows that gas powered generation can play a significant role in a net-zero future by unlocking extremely high levels of renewable generation at low cost, while ensuring a secure and reliable system. Our modelling shows total resource costs are reduced by as much as 36 per cent when gas-powered generation is used to support a renewable electricity system.
Importantly, this study assumes that gas-powered generation will operate much as it operates today, while renewable technologies will continue to fall in cost. The gas industry is, however, seeing high levels of investment in innovation in zero carbon fuels — including hydrogen and biomethane — which have the potential to decarbonise Australia’s domestic gas usage, and underpin a new large-scale export industry. This study has not sought to investigate the additional role that these zero carbon fuels may play in the future in Australia’s electricity sector.
The key findings are outlined in the following subsections of the report:
- Gas-powered generation can provide support when renewable generation is not available, at lower cost than alternatives.
- Gas-powered generation provides security that supports high renewable generation.
- Gas-powered generation is a cost-effective way to manage renewable droughts.
- The insurance provided by gas-powered generation does not imply significant carbon emissions.
- Potential developments in the NEM assist gas-powered generation in insuring against renewable droughts.
COMMENTS