Key gas observations for the month ending 15 February 2019:
Gas prices continue to remain at high levels in a historical context across the capital city trading hubs. Sydney had the highest average gas price at $10.49/GJ, closely followed by Adelaide, VIC and Brisbane.
Gas powered electricity generation was critical in late January when SA and VIC experienced very high levels of demand. In Victoria on 24 January, there was the unfortunate timing of the following:
Loy Yang A had 3 of 4 units available on 24 January and for most of the day on 25 January until 4.00pm when they lost a second unit.
Yallourn had 3 of 3 units available on 24 January and then 2 of 3 on 25 January.
On these two days, gas contributed 18% of total generation in VIC which is 15% above the 2018 average. Gas is considered a high cost source of generation (which it is most of the time). However, during periods of high demand when wind generation declines and coal power stations fail, it quickly becomes an extremely valuable generation source. Gas will continue to play a key role in the electricity market as coal power stations close and intermittent generation increases.
Competition to gas power stations will come in the form of pumped hydro and batteries, however these technologies remain expensive for the time being.