POWER November 2020 - 10

GLOBAL MONITOR
sions, and to enhance technologies for
diagnosing the operation of Indonesia's
power plants through use of artificial intelligence
(AI) and big data analysis. "
-Sonal Patel is senior associate editor
for POWER.
Australia Launches Gas Strategy
to Revitalize Power Sector
In a bid to spur economic activity and
thwart a COVID-19-related downturn,
Australia's government in September
set out a strategy to reset domestic
power and gas priorities to tamp down
power prices and generally address
a lack of private sector investment in
power production.
The " Gas-Fired Recovery " strategy,
unveiled by Prime Minister Scott Morrison
on Sept. 15, is a notable move for
the nation that continues its reign as
world's largest coal exporter, and which
this July also overtook Qatar to become
the world's largest exporter of liquefied
natural gas (LNG). At home, however,
private sector investment in dispatchable
power has screeched to a halt.
As Morrison noted in a September
speech, since the 2.1-GW Liddell coalfired
power station in New South Wales
(NSW) announced it would close in
2023, no new major power projects have
been announced by the private sector to
replace its capacity. However, a government
task force recently warned that
closure of the plant could lead to a 30%
surge in electricity prices over two years,
and if no backup capacity is created,
prices could soar by A$20/MWh ($14.63/
MWh) in 2024, an increase that could
put power prices at A$80/MWh ($58.50/
MWh). By 2030, prices would continue
increasing to A$105/MWh ($76.78/
MWh), it said.
Power prices in the nation have been
inching upward, mainly because the Australian
domestic industry has been paying
a higher price for gas than that being offered
for LNG exports, but also because
renewables have taken a larger share of
its total generation. In 2019, while the
nation relied on coal for more than half
(56%) of its total generation, 21% of
the remainder came from gas, and another
21% came from renewables (7%
from wind, 7% from solar, and 5% from
hydro). COVID has depressed power consump
tion
and sent prices tumbling,
and the National Electricity Market (NEM)
suggests that renewable investment
remains low. However, it maintains projections
that renewables are on track to
make up 75% of all generation in Austra10
4.
EnergyAustalia's 435-MW Tallawarra gas-fired station in New South Wales is a combined cycle
station with fast-start capability. The plant, which came online in January 2009, replaced a 320MW
coal-fired power station that operated between 1954 and 1989. Courtesy: EnergyAustralia
lia by 2040, driven largely by state renewable
energy targets. Because the shift is
mostly expected to occur starting in the
mid-2020s, Liddell's inevitable closure
and assumed growth in energy consumption
is expected to exacerbate prices.
Morrison gave the private sector until
the end of April 2021 to reach final investment
decisions on 1 GW of dispatchable
capacity, with a commitment for generation
in time for summer 2023-2024.
" However, if, by the end of April 2021,
the private sector has not delivered on
the target, the government will take
necessary steps to ensure the required
dispatchable capacity is built, " he said.
To that end, " while the Commonwealth
Government would prefer not to step in, "
if the market did not deliver, integrated
energy provider Snowy Hydro Ltd. will
develop options for a governmentowned
gas generator based at Kurri Kurri
in NSW's Hunter Valley, he said.
Australia's future energy mix is certain
to look different, Morrison acknowledged,
though he suggested coal " will continue
to play an important role " in the country's
economy for decades to come. In domestic
power markets, coal will likely still
comprise a quarter of the market by 2040,
possibly equipped with carbon capture
and storage, he said. " It will have an even
longer life, not just here in Australia, but in
our export markets as well. " And while he
underscored renewables' place in helping
Australia meet its carbon reduction targets
by 2030, he also noted more firming
capacity was necessary.
" Firming keeps the lights on when the
sun isn't shining and the wind isn't blowing.
It's a very practical proposition. Every
megawatt of dispatchable generation-
coal, gas, pumped hydro batteries-
can firm around 2 MW of renewables. "
However, though 9.6 GW of dispatchable
capacity came online in the decade
www.powermag.com
to 2010 (Figure 4), over the last decade,
" only around 1.6 GW of new dispatchable
capacity has been connected, none
of it here in New South Wales, " he said.
The risks " in terms of costs and reliability
from the exit of large, aging coal-fired
power stations are real, " he underscored,
pointing to the 2017 blackouts in Victoria.
That's why alongside firming capacity, the
government would work with states to
accelerate three " critical " transmission
links through a A$250 million program:
the Marinus Link, Project Energy Connect,
and VNI West Interconnectors.
Finally, the government will boost development
of a thriving domestic gas
market, Morrison said. " Our competitive
advantage has always been based on affordable,
reliable energy. As we turn to
our economic recovery from COVID-19,
affordable gas will play a central role in
re-establishing the strong economy we
need for jobs growth, funding government
services and opportunities for all, "
he said.
As part of the strategy, the government
will set new gas supply targets
with state and territory governments,
and encourage those governments to
include and enforce " use it or lose it " requirements
on gas exploration and production
licenses. Pivotally, government
will also move to create a " Gas Hub " at
Wallumbilla in Queensland, based on the
U.S's Henry Hub system, and invest in
pipeline and infrastructure development,
and export agreements to prevent shortfalls
in dispatchable power, and promote
competitive and transparent gas pricing.
Additionally, the government will accelerate
gas exploration and development
in priority areas, including the
Beetaloo Basin in the Northern Territory
and Queensland's Northern Bowen and
Galilee Basins, he said. In an effort to
boost competition and transparency, the
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POWER November 2020

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