2026 ISP Methodology issues paper

AEMO questions – Gas supply expansion model

APGA response

1. Do you consider that the proposal to develop a gas supply expansion model appropriately addresses the action in the Energy Ministers’ response to the Review of the ISP for additional gas analysis to be incorporated in the ISP? If yes, why? If not, why not, and how could this action otherwise be achieved?

The gas supply expansion model proposed by AEMO, in our estimation, does address the need for additional gas analysis to be incorporated in the ISP – to the extent that it can do so while also meeting the needs of the ISP.

The changes permit AEMO to develop this model using information that is already available to it. This addresses the incongruency of AEMO collecting valuable insights for the GSOO and not being able to apply these insights and modelling to the ISP.

Enabling AEMO to use this information, rather than collecting any additional information, will reduce the burden of compliance on gas market participants.

2. Do you agree with the proposal for AEMO to develop at least one gas development projection per ISP scenario, and apply the projection as an input to the capacity outlook model? If yes, why? If not, what method would you recommend for the inclusion of gas development projections in the ISP?

APGA agrees to this proposal to the extent that the gas development projections are a necessary component of ensuring the ISP adequately reflects a realistic trajectory for gas. APGA also agrees that industry consultation is a critical part of this, providing the necessary context to developing these projections.

It is APGA’s understanding that any projections of supply and infrastructure options or augmentations are intended coarse and limited in resolution to sub-regions. The nature of the gas market makes it inappropriate for AEMO to recommend specific gas developments in the ISP, and APGA agrees with this approach as long as those projections remain coarse.

3. What alternative approaches should AEMO consider for enhancing the incorporation of gas in the ISP to address the action in the Energy Ministers’ response?

APGA has previously advocated[3] for a multi-vector modelling approach. Specifically, developing a separate gas market model to complement the existing electricity model, considering future gas supply and network economics with the introduction of renewable gases. APGA appreciates that such a model would be beyond the current scope permitted by the National Electricity Laws and likely AEMO’s current resourcing.

AEMO’s current proposal is an expansion to their existing modelling capability, which is currently focused on a single vector (electricity) with gas largely an input for the purposes of gas power generation fuel. The proposal is a considerable improvement, but it remains to be seen whether the expanded model can truly reflect the intricacies of and have reliable predictive power for gas markets.

APGA concurs with AGIG’s response that the ISP needs a more nuanced consideration of hydrogen and H2 production pathways. The potential for H2 production to act as an energy storage mechanism (i.e. a sink for excess renewable electricity production) adds a complex but important variable that must be considered in projections. This is not hypothetical – the SA Whyalla H2 GPG facility is being constructed on this principle.

AEMO will be incorporating more detailed data and assumptions about H2 (and biomethane) production costs through data sourced from ACIL Allen. APGA observes that previous ISPs have limited H2 production locations to ports, with electricity sourced from the NEM – rather than produced behind the meter at VRE generation sources. This is an unrealistic model for the majority of domestic H2 production due to cost and also has implications for the electricity system generally. Given this AEMO should reconsider its H2 assumptions more broadly, including H2 production location and the 10% blending limit applied to pipelines.

4. What improvements could be made to AEMO’s proposed approach to increase consideration of gas availability, considering gas transportation and storage capacity?

AEMO’s approach to including gas transport and storage capacities is not clear in the Issues Paper and presumably will be developed in more detail for the Methodology in 2025.

The use of existing data collected by AEMO for its other purposes – notably the GSOO and Gas Bulletin Board – is likely to be sufficient to provide AEMO with the information necessary to increase consideration of these factors in the ISP.

An ISP which does not consider these factors risks – and likely already has – substantially overestimating the scale of electricity storage required in a net zero NEM. AEMO has to date not been able to include its existing gas storage and transport data[4] in ISP modelling. Any consideration of gas transportation and storage capacity is an improvement.

5. What improvements could be made to AEMO’s proposed approach in its capacity outlook models to improve the representation of fuel usage for gas generation, particularly for mid-merit capacity?

As noted in the substantive comments above, the current ISP demand-side analysis has consistently underestimated gas consumption. Successive ISPs have forecast declines in the requirement for dispatch from gas power generation which have not been consistent with actual demand.

APGA approves of any measures to improve this modelling using the information already available to AEMO through the GSOO and gas Bulletin Board. It is likely this information will provide substantial uplift in the quality of forecasting developed for the ISP regarding gas generation capacity.