Re: AGL LNG imports at Crib Point

AGL Employee

@cribpoint123 Yes, as AGL transitions out of coal towards more reliable low cost and low carbon power, the amount of gas required is likely to rise above 17%. This was acknowledged in the East Coast Gas Outlook (December 2018) by EnergyQuest:


‘Gas-fired power generation (GPG) is losing market share and volume to renewables, but is expected to recover as ageing coal plants are retired.’


While we expect some rise, it is not yet certain how significant the rise will be. The ACCC Gas inquiry 2017-2020 interim report found gas demand for commercial and residential customers will remain relatively flat. Industrial users may also decline, although this is because the cost of gas will impact the commercial viability of businesses.

 

Gas plays a critical role in the transition out of coal, although it is not renewable, it is the cleanest burning fossil fuel. We understand that gas is only a medium-term fuel, and while some would like us to jump straight to renewables, we need a reliable supply of lower emission fuel to generate the firming capacity needed to make an effective transition to renewables in the next decade.

 

As also mentioned in the ACCC Interim Report (released July 2018), ‘the demand for gas powered generators (GPG) is difficult to forecast accurately as it is dependent on factors such as rainfall, wind, renewal generation investment, unexpected retirement of generation or unplanned outages.’

 

This is what made an LNG project like the Gas Import Jetty attractive because the FSRU will be leased and if the facility is no longer needed the FSRU will be unmoored and will sail away.

 

We are aware that there are some key challenges ahead, if gas is to lead the transition. Most pressing is access to gas because the legacy Bass Strait gas reserves are in decline.