Opportunities for gas in Victoria

For nearly a century, Victorians have enjoyed reliable, secure and affordable electricity. Almost all of this has been generated from brown coal. But brown coal produces high levels of carbon pollution, making electricity production responsible for more than half
of Victoria’s total carbon pollution.

To move toward a low carbon future we need to develop new energy sources and use current sources in a more sustainable way. We will need to change how and where our energy is generated, and how we use it.

Gas-fired electricity provides proven low emissions power and its use is set to grow.

Gas will become increasingly important as we transition to a low carbon future. Under an emissions trading scheme, investment in gas fired power stations will be more attractive as coal becomes less cost competitive. Gas also has the potential to be a reliable backup source of power to supplement renewable energy, such as wind, by turning on quickly when the wind levels drop.

For these reasons, gas fired electricity generation will make a much bigger contribution than it does now to the future electricity generation mix in Victoria.

As well as electricity generation, gas provides us with many other uses, such as transport fuel in the form of Liquefied Natural Gas (LNG) or Compressed Natural Gas (CNG), and as a domestic fuel.

Figure: Maturity of gas technology

Snapshot of the technology

Pressurised gas is delivered directly to most homes and businesses in Victoria for use in cooking, heating and small scale electricity generation.

Gas-fired electricity generation is a fully commercial technology that is widely used around the world. This can be done in a variety of ways, such as:

• steam generation where the gas is burnt in a boiler to heat water into steam (like Newport Power Station near the mouth of the Yarra River),
• open cycle gas turbines where the gas is combusted in the turbine (like the new power station being built at Mortlake), and
• combined cycle gas turbines (CCGT) where the hot exhaust from the gas turbine is used to heat water as for a conventional steam turbine (this is the most efficient form of gas power generation technology).

CCGT is the most efficient, but expensive way of making power from gas. It has very low emissions and produces around a quarter of the carbon emissions of our best brown coal fired power plants.

Status of gas in Victoria

Victoria has the most extensive reticulated gas network in Australia. Gas is used extensively in Victorian homes and businesses for heating, cooking, and other industrial uses. Our gas is also linked to markets on the east coast of Australia.

Only a small proportion of Victorian electricity comes from gas-fired power stations but it makes up an important part of our energy capacity. Gas-fired electricity generation is used largely to meet our peak energy demands in summer. As a result, although gas provided less than 5 per cent of all our electricity in 2008, gas-fired power stations provide 20 per cent of capacity in Victoria.

This proportion is expected to expand as renewable energy capacity increases and gas will be required to help meet demand when generation from renewable plants cuts out.

Gas at a glance

• Installed capacity (Vic) - 1940 MW
• Per cent of total capacity (Vic) - 19.4%
• Largest generator (Vic) - 510 MW Newport, Vic
• Largest generator (Aus) - 1280 MW Torrens Island, SA
• Largest generator (World) - 4802 MW Kawagoe, Japan
• Victorian locations - Victoria’s gas-fired power stations are in Melbourne and Gippsland. A new power station is being constructed in Mortlake in western Victoria

Figure: Location of Victoria's gas resources

The future for gas

Gas will play an increasingly important role in the transition to a low carbon future, so our use of gas will therefore increase.

There is the potential for new discoveries of gas reserves in the Otway and Gippsland basins.

But in the longer term, bigger pipelines may be needed to transport the gas from sources in other states with a greater gas resource potential, such as Queensland.

The price for gas will also play an important role in its future, with the expected global increase in demand for gas impacting on the cost. Our gas prices are currently low by international standards. But because our gas market is linked down the east coast, if Queensland gas, for example, is developed for export, prices may begin to rise in Victoria.