Natural Gas Has Role in Decarbonizing the Australian Electricity Supply

Abstract

This article, written by JPT Technology Editor Chris Carpenter, contains highlights of paper SPE 202210, “Future Roles for Natural Gas in Decarbonizing the Australian Electricity Supply Within the NEM: Total System Costs Are Key,” by Stephanie Byrom, University of Queensland; Geoffrey Bongers, Gamma Energy Technology; and Andy Boston, Red Vector, et al., prepared for the 2020 SPE Asia Pacific Oil and Gas Conference and Exhibition, originally scheduled to be held in Perth, Australia, 20–22 October. The paper has not been peer reviewed. Electricity systems around the world are changing, with the Paris Agreement of 2015 a catalyst for much current change. The Australian government ratified the agreement by committing to 26–28% emissions reductions below 2005 levels by 2030. Reduction in emissions from electricity generation has become the focus of these targets. To decarbonize the grid to meet targets while building firm, dispatchable generation capacity to support the system, a new metric is required to measure success. The complete paper explores the outputs of the model of energy and grid services (MEGS), illustrating outcomes if a single technology group is favored. Introduction The majority of electricity in the Australian National Energy Market (NEM) is provided by synchronous thermal power generation, which also has delivered services required for grid stability such as inertia and frequency control. The NEM commenced operation in December 1998 and includes five regional market jurisdictions: Queensland, New South Wales (including the Australian Capital Territory), Victoria, South Australia, and Tasmania. In 2020, the NEM incorporated approximately 40,000 km of transmission lines and cables, connecting approximately 57 GW of generation capacity to consumers. This thermal generation mostly has consisted of coal- and gas-based technologies. Electricity grids are also changing from largely centralized electricity generation systems to more decentralized ones and from unidirectional electricity flows to bidirectional flows as part of the effort to reduce emissions. However, with increasing penetration of variable renewable energy (VRE) generation, it is important to plan for and manage generation-asset investment to track the lowest possible total system cost and highest reliability path to a low-emissions future. A Competent, Diverse Grid A competent electricity grid is one that can keep the lights on, so to speak, within the legislated tolerance for outages and performance. A competent grid is adequate, reliable, secure, operable, and robust against externally driven disruptions. In practice, the reliability of the electricity grid often seems to be taken for granted; however, it is an essential element of the modern economy, and, with a changing grid, reliability is increasingly important. When a decision must be made to build or replace an individual power plant, stakeholders (individual investors) have traditionally considered the levelized cost of energy (LCOE) of the alternative generation options, which di-vides the total cost of an installation or plant by the kilowatt-hours it produces over its lifetime. However, metrics such as LCOE, based on grid-independent formulae to help power plant investors to maximize returns, are inappropriate for comparing technologies that deliver and demand a complex menu of services specific to the grid. A different metric is required to evaluate each technology’s contribution to the grid.