Comment by Frank Tudor - Managing Director, Jemena

Since the new Minister for Climate Change and Energy, Chris Bowen, was sworn in on June 1, he has faced an energy market in turmoil.

From our country’s largest energy company facing mounting pressure to bring forward the closure of its coal plants, to the suspension of the National Electricity Market and the east-coast gas market, these are truly trying times.

While there are many factors at play here, these issues remind us that we are still to determine the exact make-up of our future energy system and the technologies which will underpin it. In this context, the concept of “do-ability” emerges.

Do-ability refers to our capacity to deliver the energy system of the future both quickly and affordably.

It reflects the fact that competition for raw materials, labour, and finance is tighter than ever before, and that Australia is competing against over 130 other nations who have also set a target of reducing emissions by 2050.

Do-ability also forces us to consider the sheer size and scale of Australia’s energy system – which comprises over 40,000 kilometres of electricity transmission lines and cables, and 39,000 kilometres of gas transmission pipelines.

While there are calls from some quarters to abandon and/or replace this system, do-ability suggests we would be better placed re-imagining it for the new energy world.

Australian homes and businesses have long benefited from low-cost, reliable energy, which has been delivered to them via our country’s significant electricity and gas networks.

We now have a great opportunity to reinforce this competitive advantage by developing a range of renewable fuel types which utilise both our electricity and gas networks, something referred to internationally as the hybrid model.

To deliver the hybrid model, we must support the development of biogas and hydrogen by introducing a Renewable Gas Target while we continue to invest in the renewable electricity sector.

In the short, medium, and long-term, this is the best insurance we have against threats to system resilience such as weather events or instances when solar, wind, and (as we’ve seen recently) coal generation is unavailable.

The hybrid model is also the best way to keep costs down for consumers. In February 2021 Frontier Economics published a paper looking at this issue titled Potential for Gas Powered Generation to Support Renewables.

The paper compared the cost of full electrification of the energy system against the cost of decarbonising both electricity and gas infrastructure (the hybrid model). The paper found that the hybrid model would see consumers avoid between $5 billion - $7.5 billion per annum in systems costs compared to full electrification.

In 2019, a similar study conducted by Navigant, this time in Europe, also concluded that a hybrid energy system was the most efficient way of delivering net-zero emissions and would save consumers €217 billion (approximately $300 billion) annually.

Energy projects are also notoriously complex and can take up to 10 years through their planning and approvals process to commissioning, noting (in AEMO’s step-change scenario) that by 2050 we will need to increase renewable generation capacity from 15GW to 140GW, while trebling firming capacity by the same time.

In the face of global supply-chain bottlenecks, complex stakeholder negotiations, and fierce competition for labour, it’s inevitable that we will see further project timeline blow-outs. Again, our existing infrastructure, if repurposed, offers us a solution which will save us time in the race to net-zero.

As we race towards net-zero emissions, we would be wise to keep our options open and decarbonise both our electricity and gas networks. This remains the best way to provide
Australian energy consumers with safe, secure, and sustainable energy.

Jemena's Western Sydney Green Hydrogen Hub