A short-lived gas shortfall: A review of AEMO's warning of gas-supply 'short falls
journal contributionposted on 19.05.2017 by TIMOTHY FORCEY, DYLAN MCCONNELL
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With the publication of the 9th March 2017 Gas Statement of Opportunities (GSOO), the Australian Energy Market Operator (AEMO) cautioned that within 18 months, “shortfalls” of gas supply could lead to shortfalls in the supply of electricity generated by burning gas. AEMO suggested solutions to potential shortfalls that included the construction of new pipelines or Coal Seam Gas (CSG) fields.
Our report investigates AEMO’s gas-and-electricity-system modelling results as well as the communications that followed. We explore reasonable alternate conclusions that can be drawn by analysing AEMO’s published modelling inputs, assumptions, and results, and by contemplating future real-world events.
We find that although a “gas-price crisis” exists in eastern-Australia, a gas-supply shortfall is very unlikely to occur. Our review finds that the size of AEMO’s forecast shortfall is very small, amounting to no more than around 0.2% of annual supply.
In addition, only eleven days after announcing its supply-gap concerns, AEMO essentially closed the gap when it published, on its website, updated (lower) electricity-demand forecasts that therefore lead to less demand for electricity generated by burning gas.
In this report we also consider alternative solutions to gas shortfalls, and find that there is no need to expand gas-supply infrastructure.