ISP cements the role of gas in the energy transition

gas, isp, aemo, agpa

Gas played a central theme in the Australian Energy Market Operator’s recent integrated system plan (ISP), which outlines the road ahead for the energy transition.

The ISP is a 25-year roadmap for the national electricity market to transition to renewables. The latest edition highlighted the integral role energy sources like gas, solar, and wind will have in transitioning the grid from coal-dependancy.

“Australia’s coal-fired generators are retiring,” the ISP said.

“The shift to renewables is well underway, with renewables accounting for almost 40 per cent of the total electricity delivered through the national electricity market (NEM) in 2023.”

The ISP confirmed that renewable energy, connected by transmission and distribution, firmed with storage and backed up by gas-powered generation, is the lowest-cost way to supply electricity to homes and businesses as Australia transitions to a net zero economy

“Firming technology like pumped hydro, batteries, and gas-powered generation will help maintain grid stability and inertia, smooth out volatile frequencies, and balance out fast changes in supply and demand,” the ISP said.

“Gas generation also provides back-up supply during long periods of ‘dark and still’ renewable droughts and times of extreme peak demand, particularly in winter.”

The ISP said the need for higher levels of flexible gas capacity will challenge Australia’s existing gas supply infrastructure. In particular, the ISP projects that the east coast of Australia will need at least 12.8GW of new gas-fired generation in the coming years.

The Australian Pipelines and Gas Association (APGA) welcomed the ISP and its recognition of gas in the energy transition.

APGA chief executive officer Steve Davies said Australia can accelerate the transition by exiting coal, helping save more of its carbon budget for the harder, later years of the transition with supportive gas policy settings.

“The wind droughts of the past three months in southern Australia have proven the importance of gas generation, and the ISP recognises our grid will get more volatile as the transition progresses,” Davies said.

“Solar and wind are the Lennon and McCartney of the transition, while gas is doing its job as Ringo. But just because gas isn’t the lead, doesn’t mean it shouldn’t be supported as part of our future electricity system.

“In the US last year, the largest emission reductions in electricity generation came from coal-to-gas switching. We can do the same, but it requires coordinated gas supply and electricity policy across all governments.”

The APGA also acknowledged the ISP concerns about pipeline constraints, and has repeatedly invested in new pipeline capacity ahead of domestic demand, including the Stage 1 and Stage 2 expansions of the East Coast gas grid which increased north-south flows to Victoria and NSW by 25 per cent ahead of this winter.

Plans are also well-advanced to reverse the Eastern Gas Pipeline to improve gas flows into Victoria.

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