Gas Shortage Warning for Southern Australian States

A flame burns on a gas stove in New York on April 28, 2023. Photo Illustration by Michael M. Santiago/Getty Images

Australian Energy Market Operator (AEMO) is predicting gas supply shortages into the future, mostly in the southern states.

The report warns of the risk of shortages on extreme peak demand days from 2025, small supply gaps from 2026, and greater supply gaps from 2028.

Authors note that during the shift to a “net zero emissions future,” gas will continue to be used by Australians, supporting the electricity sector.

The 2024 Gas Statement of Opportunities (GSOO) forecasts how adequate gas supplies will be in Australia from now until 2043.

“The 2024 GSOO continues to forecast risks of shortfalls on extreme peak demand days from 2025 and the potential for small seasonal supply gaps from 2026, predominantly in southern Australia, ahead of annual supply gaps that will require new sources of supply from 2028,” the report states (pdf).

“Gas consumption by residential, commercial and industrial consumers is forecast to decline, but production in the south is forecast to decline faster.”

The report notes gas production in the south of Australia is predicted to fall faster than gas consumption by residential, commercial and industrial consumers.

“While the scale of gas consumption remains uncertain through the energy transition, particularly in relation to gas usage for electricity generation, all scenarios identify the urgent need for new investments to maintain supply adequacy,” the report states.

Winter 2025 Gas Shortage Warning

In 2025, there is a risk of gas shortages in winter in the southern parts of Australia in “extreme peak demand conditions.”

In this situation, severe weather conditions could drive greater demand for heating, along with greater demand for gas-powered electricity generation.

Meanwhile, in 2026 and 2027, there could be “small seasonal supply gaps” in winter in southern Australia amid sustained high gas usage conditions.

From 2028, the authors predict the annual supply gaps will rise as southern production declines.

After the mid-2030s, gas-powered electricity generation is forecast to rise as coal generations retire via the energy transition.

Commenting on the report, AEMO CEO Daniel Westerman said gas production is forecast to fall faster than demand in the south.

He noted this would be driven by declining production from the Bass Strait, which historically supplied two-thirds of southern Australia’s gas.

“Since the 2023 GSOO, a range of storage and pipeline projects have been completed, improving gas supplies to southern states that will help offset declining production from Bass Strait gas fields,” Mr. Westerman said.

“While the report identifies the need to deliver new infrastructure by 2026, running gas-powered generators on liquid fuels could provide temporary relief during periods of extremely high gas demand.”

Mr. Westerman added that from 2028 supply gaps will increase in size as Bass Strait production falls significantly.

“In the northern regions, where the majority of gas is produced for export, investment is also needed from 2026 to meet both export and domestic demand,” he said.

Looking Ahead

AEMO highlighted the need for gas-powered electricity as the nation transitions from coal to renewable power.

“The 2024 GSOO reaffirms the important role gas-powered electricity generation will play in reducing emissions and maintaining electricity reliability and security as the power system transitions from coal to intermittent renewable generation and an increase in electricity demand through the electrification of some gas use,” the AEMO said.

Mr. Westerman said flexible gas-powered electricity generation is an essential component of the energy mix into the future.

“Gas, along with batteries and pumped hydro, will enable higher rates of renewables and support electricity reliability as Australia’s coal-fired power stations retire.”

ACT and Victoria Bans Gas

A ban on new gas connections passed the Australian Capital Territory (ACT) Parliament in Nov. 2023 and applied from Dec. 8, and encompasses all new residential, commercial, and community facility zones.

Further, the law will apply to major renovation projects and knockdown rebuilds where a gas connection has been removed.

Speaking on the plan in Parliament, Greens Emissions Reduction Minister Shane Rattenbury said the regulation would help the city achieve a “sustainable, zero emissions future.”

“This regulation to prevent new gas network connections in the ACT is an important step to reaching net zero emissions by 2045,” Mr. Rattenbury said in Nov. 2023.

He said about one-third of Canberra homes ran completely on electricity and that existing gas connections will not be impacted by the new regulation.

An exemption process will also be established for some businesses, however, the government said these would only be granted in “limited circumstances.”

The Liberal Party opposed the legislation, but the Labor and Greens majority ensured the laws passed.

Canberra Liberal MLA Nicole Lawder said, “This legislation will limit Canberrans’ choice when it comes to selecting their preferred energy source for their homes (pdf).

Victoria banned new gas connections for new apartments, homes, and residential subdivisions from 2024.

A strategic plan launched by the government-owned Victorian State Electricity Commission (SEC) said new homes requiring a planning permit would be all-electric from 2024 (pdf).

“Switching heating, hot water, and other appliances to electric will help reduce emissions and energy bills. In fact, whole home electrification can lower household energy bills significantly,” the report said.

“With around 80 percent of households connected to gas, Victorians use more gas at home than any Australian state.”

New York also announced a state ban on gas stoves for small buildings starting from 2026 and larger buildings from 2029.