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APGANov 8, 2021 4:20:00 PM1 min read

The role of gas in the transition to net-zero generation

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This report by Frontier Economics prepared for the Australian Gas Industry Trust and Jemena assesssed the role of gas-powered feneeration of electricity in the the coming decades. The report found that in an electricity system increasingly transitioning to intermittent renewable generation, gas-powered generation (GPG) is the least cost way to add capacity to the predicted mix of generation and storage in 2025. This finding holds when a carbon price equal to either the average Australian or average European price of carbon credits in 2020/21 is included.

The finding is based on Frontier Economics's estimates of the whole of electricity system cost (WESC), which accounts for the characteristics of generation and storage capacity that the system needs to maintain reliability and stability. In contrast, estimates of the levelised cost of electricity (LCOE), which are often used to compare the relative costs of generation and storage technologies, do not account for the extent to which each generation and storage technology contributes to reliability and stability. This means that LCOE does not account for the full cost to the system of investments.

Estimates of WESC also indicate that the flexibility and dispatchability provided by GPG becomes more valuable to the system over time, as the system increasingly transitions to intermittent renewable generation.

Download The Role of Gas in the Transition to Net-Zero Power Generation - Full report.

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