Victoria has ‘adequate’ power supply but clouds loom over gas reserves

The Andrews government has insisted the state has sufficient energy supply, but it has been warned Victoria faces a potential gas shortage in winter 2023.

Australia’s skyrocketing electricity and gas prices prompted the Australian Energy Market Operator (AEMO) to make the unprecedented decision on Wednesday of to restore calm to the volatile system.

Senior Victorian minister Jacinta Allan, who rebuffed the federal resources minister’s suggestion that the Andrews government reverse the , said the state would push ahead with its long-standing policy on transitioning to renewable energy.

But Victoria, which has the highest reliance on gas of any Australian state, could be forced to confront a potential shortage next winter, according to Alison Reeve, the deputy program director of climate and energy at the Grattan Institute.

There isn’t anything particularly unique about Victoria’s circumstances right now, Reeve said.

But Victoria is potentially facing a gas shortage next winter because the reserves in the Bass Strait are running low. Lifting the ban on coal seam gas exploration would make no difference because it takes time to find the gas, do the exploration wells, and put productions in place.

On Tuesday, federal Resources Minister Madeleine King told The Age and The Sydney Morning Herald that Victoria’s ban on fracking and coal seam gas extraction when demand for gas is high and existing fields are likely to start producing less.

The have traditionally supplied up to half of Australia’s east-coast gas demand but have been in rapid decline. With a lack of new gas projects capable of replacing diminishing Bass Strait supplies, Reeve is concerned about gas shortages as early as 2023.

Allan said on Wednesday that the country’s energy ministers needed to work together to transition to renewable energy in the face of the current crisis – not reverse a ban on fracking – and added the country suffered nine years of inaction and inadequate leadership under the former Coalition government.

I think it’s a little premature to speculate on what action might be taken in the future because the advice we have right now is there is adequate supply for Victorians, she said.

There is undoubtedly pressure on our energy supply but the advice from AEMO is that Victoria has adequate power supply … we also should remember, though, that we are in the midst of a global energy crisis.

Allan said AEMO had not advised the state’s biggest electricity consumers, such as Alcoa’s Portland smelter, to power down.

Reeve said the current energy crunch, and AEMO’s decision to suspend the market, should send a rocket under all of the energy ministers to start working together.

She said the current energy market was not fit for purpose and needed to be overhauled to make it value reliability.

AEMO said the crisis gripping the country’s east coast was the result of a confluence of factors, including several coal-fired generation units being taken out of action for planned maintenance and unplanned outages. It said there were periods of low wind and solar output, as well as a colder start to winter.

Global supply chain issues are leading to delays in repairing the coal-fired power plants, and the global gas crisis caused by the Russia-Ukraine war is leading to higher stock market prices, forcing Australian energy companies to withhold their supplies or raise prices.

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