<
https://reneweconomy.com.au/amid-calls-for-more-gas-the-energy-market-rule-maker-is-quietly-preparing-for-a-death-spiral/>
"Gas is back in the headlines this week, as unplanned coal power outages, a
blast of particularly wintry weather and, as the
Australian Financial Review
puts it, “feeble renewable generation” have combined to drive higher gas power
consumption in Victoria.
Add to this a reduction in gas processing capacity at the Longford plant and
you have all the ingredients you might need to bash wind and solar while
launching a fresh plea for more gas – or as the
Australian Financial Review
calls it, “the fossil fuel vilified by the Allan state government.”
To be fair, all of the above did happen over the course of Wednesday and
Thursday – with the exception of the coal generation unit, which fell apart on
Sunday – resulting in wholesale power prices in Victoria peaking at $17,500/MWh
on Thursday evening.
But to be fair to Victoria, the state government is currently leading the
nation (it’s not a high bar) in legislation to shore up gas supplies from the
demand side – or what the
AFR prefers to call vilification.
The Victorian Labor party is forging ahead with plans to get gas out of homes
and small businesses in the state, in what many experts believe will be a big
part of ensuring there’s enough gas around for occasions such as this week,
when coal flunks out and the wind doesn’t blow and we don’t yet have enough
storage to fill the gaps.
Having already banned gas connections for new-build homes in the state,
Victoria’s energy minister Lily D’Ambrosio in December released a
2024 Gas
Substitution Roadmap Update and a
Building Electrification Regulatory Impact
Statement (RIS), calling for feedback on a range of options for the continued
phaseout of gas.
In a foreword to the update, D’Ambrosio says gas is “no longer a cheap and
plentiful source of energy for Victorian homes and businesses” and so weaning
the state’s more than 2 million homes off the fossil fuel will cut energy bills
while also freeing up supply for industry and generation.
But the important thing to note here is that Victoria is not alone in its
exodus away from residential gas. It’s actually happening all over the country
as households and businesses discover it is much cheaper and more sustainable
to go electric, backed up by solar and maybe, now, a discounted home battery.
Such is the momentum of this shift – legislated or not – that the national
energy market rule maker, the Australian Energy Market Commission (AEMC) this
week initiated consultation on a rule change that seeks to update cost sharing
associated with new gas connections, to avoid a disorderly transition from
fossils to electric.
The rule change, requested by Energy Consumers Australia, calls for a change to
the
National Gas Rules (NGR) that would introduce an obligation on gas
distributors to charge new customers the full cost of a new gas connection
through an upfront connection fee.
As a side note, this is a rule that is already in place in Victoria, following
the proposal of a rule change, consultation and then updating of the state’s
Gas Distribution Code of Practice, which took effect on January 1, 2025.
The issue over the so-called death spiral for gas networks is a critical one
for industry and regulators, because one of the unresolved problems of the push
to electrification is who gets to bear the cost of stranded gas pipelines and
other infrastructure.
Currently, they are socialised across all network customers, but as more and
more consumers electrify, the costs of operating and maintaining the network
will be shared among a declining customer base."
Cheers,
*** Xanni ***
--
mailto:xanni@xanadu.net Andrew Pam
http://xanadu.com.au/ Chief Scientist, Xanadu
https://glasswings.com.au/ Partner, Glass Wings
https://sericyb.com.au/ Manager, Serious Cybernetics
