Renewables set to replace gas as South Australia’s main source of electricity

Presuming that renewable projects proceed, 67% of South Australia’s electricity capacity will be provided by renewables by 2025, analysts say.

Industry analysts say that gas generators will no longer be South Australia’s main source of energy within eight years. This is a direct result to the rise of renewables and battery storage.

South Australia’s energy transition could be a “leading case study on managing a power system in transition for other mature markets to follow”, says a report by Wood Mackenzie.

The news comes as the states government progresses ahead with plans to build its own new gas generator and AGL pursues plans to construct a new gas power station to replace part of its ageing Torrens Island gas generator.

“Currently, South Australia’s peak loads are managed by open-cycle gas turbine (OCGT) plants,” said Wood Mackenzie’s Asia-Pacific power and renewables principal analyst, Bikal Pokharel. “But, by 2025, battery storage would be cheaper than OCGTs in managing peak loads … OCGTs would then be relegated as emergency back-ups.”

According to the report by Wood Mackenzie and Greentech Media Research, battery costs will fall by 50% by 2025.

“If current cost trends continue, 2025 could very well see renewables and batteries overtake rival generating alternatives in dominating South Australia’s power system, and the region could become a leading case study on managing a power system in transition for other mature markets to follow,” Pokharel said.

Researchers estimate that 1600 MWh of battery storage would be enough to satisfy South Australia’s needs by 2025. This is 4 times the capacity and 12times the storage of Tesla’s new Hornsdale facility that was announced this month. This is a very different type of battery system, as it isn’t designed for energy security but for residential peak supply.

Analysts say that the price of battery storage could drive gas out of the system, along with the high penetration of wind and solar. 67% of South Australia’s energy capacity may be provided by renewables by 2025.

That energy capacity would need dispatchable power to make up for the unpredictable nature of wind and solar power. However, annalists believe that gas would not be able to deliver such a service.

“With significantly increased renewable penetration and hence the intermittency, monthly and hourly gas demand fluctuations will be increasingly pronounced,” Pokharel told the Guardian. “Current gas supply and transportation terms cannot meet this type of demand profile.”

As a result, expensive diesel generators might become economic since the fuel can easily be stored and made quickly available when needed.

Pokharel said changes to the operation of the market could allow gas to compete after that date. To do that, subsidies would be required in return for standing capacity, or for “must-run” gas units.

The state also said on Thursday that it will seek to reduce the electricity bills of more than 180,000 low-income households by directly negotiating with energy companies on their behalf.

The Australian government will allow energy companies to bid to be the supplier for low-income households that currently receive energy grants.

“We know the majority of people receiving the state government’s energy concessions are on standing contracts; we believe we can negotiate a much better deal for them,” Bettison said.

Along with offering lower prices on energy, the government is hoping that energy companies will also include flexible payment options to assist people paying their bills.


Also read: A new record for renewables in the UK


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