Gas-rich Australia is facing a looming energy shortage
How has it come to this? The Australian Energy Market Operator has just released its 2017 Gas Statement of Opportunities. It makes sobering reading, with warnings of a looming gas or electricity shortfall in eastern Australia. The nation is demanding solutions, but how long will it take, we wonder, for political debate to turn into action?
The 2017 Gas Statement of Opportunities offers a stark assessment of the current energy market and also a considered view of the future.
The report raises a number of potential market-led solutions to the gas shortage:
- Redirect a small portion of LNG supply from exports to the domestic market.
- Increase production from existing gas fields.
- Explore and develop new fields.
- Build the Northern Gas Pipeline, which will link Northern Territory gas with the eastern and south-eastern Australian markets.
- Develop the proposed Narrabri Gas Project in New South Wales.
- Invest in alternative electricity generation and storage technologies.
The report may be misleadingly entitled, as the AEMO warns that these fixes are a number of years away and many are limited by production moratoria.
But this problem isn’t years away. It’s here now.
Indeed, the AEMO states that unless additional gas is produced, there could be either a gas or electricity shortfall between 2019 and 2024. This means that very soon Australia will be forced to choose between gas consumption or electricity generation, which means a prolonged, painful future for consumers and/or businesses.
But perhaps the last point on innovation may hold the most hope? Tesla has just thrown down the gauntlet to South Australia with the bold claim of solving their electricity grid problem in 100 days. While Tesla is known for optimistic production targets, framing the debate in days rather than years will go a long way in shaping the debate for what’s possible.
Tesla won’t solve the gas imbalance, but given the stagnation of policy at a national level it is this kind of immense and immediate action that’s needed to solve such an immense and immediate issue.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.INVEST WITH MONTGOMERY