Aug 19 2021

Is degasification plausible?

As energy consumers we always looking at more efficient and cost-effective ways of heating and cooling our homes and workplaces. 

In the southern parts of the country, gas remains a mainstay of heating as many still think it is cheaper than electricity, which is often not the case. 

In states like Victoria there is a move by the State Government to encourage people to think about ‘degassing’ their homes for cooking and heating.  

The consideration of “degasification” is part of efforts to achieve net zero emissions by 2050 for the state. Both the Victorian Department of Environment Land, Water and Planning (DELWP) and Infrastructure Victoria are conducting reviews into gas substitution and have released papers seeking  views on moving away from gas.

Victoria uses gas heating broadly. Cold winters, plentiful gas reserves and low gas prices ensured reticulated gas was the logical choice for Victorian businesses and for households for heating and cooking as evidenced by around 2 million connections. In recent years there has been a shift in this landscape – local gas reserves are depleting, while gas prices have increased substantially as east coast gas users are exposed to global LNG prices following the commissioning of Queensland’s three LNG export terminals. 

Victorian gas production is decreasing rapidly and the Australian Energy Market Operator (AEMO) is forecasting the state’s gas production will be unable to supply a 1 in 2 winter peak day by 2023.

But is degasification plausible? Electrification along with energy efficiency measures appear to be the most tangible solutions to support a gas decarbonisation strategy. Electrication can draw on proven technology and existing infrastructure. As noted in a recent CSIRO and Climate Works report commissioned by AEMO, electrification is a “cost effective option to reduce emissions”.

Of all the emissions reporting sectors, electricity has demonstrated the greatest ability and willingness to reduce its emissions and respond to policy changes[i]. Since 2011, overall, emissions from the electricity sector have decreased and are now around 20 per cent lower, while the emissions intensity of generation is expected to continue to decrease as more renewable generation comes into the system.

One of the key opportunities presented by the electrification pathway is the inverse seasonality of electricity and gas consumption. Electricity networks have headroom in winter in Victoria because it is a summer peaking market. In contrast, gas demand is winter peaking. There should be capacity in Victoria’s electricity networks to accommodate the additional demand from an electrification pathway to replace gas. 

When comparing the difference between the 2008/09 summer peak demand of 10,490MW (the highest recorded for Victoria) and winter peak demands since then, this headroom averages 2,613MW and is never below 2,121MW. A recent AEMO report presents a possible 2050 Victorian load shape under an electrification scenario. Under this scenario winter demand could be 4,500MW higher while the summer load profile would be 2,500MW higher.

The additional demand created by implementing an electrification pathway for reticulated residential and commercial gas usage will happen incrementally over years. Demand reductions from energy efficiency improvements would be expected to partially offset this.

Space heating accounts for nearly three quarters of natural gas residential consumption and this is similar for commercial customers. A recent Northmore Gordon report demonstrates high efficiency reverse cycle air conditioners (ACs) can deliver the same level of heat as gas with significantly less input energy. Reverse cycle ACs utilise ambient heat, which is “free energy”. 

A technology which was much talked about (and invested heavily in Australia) more than a decade ago, then appeared to go off the boil is being drawn from as another alternative for home heating – geothermal or geoexchange systems.

Geothermal heating or cooling systems (or geo-exchanges) work by pumping water or a refrigerant underground and back to the surface again.  

While underground, the refrigerant assumes the same temperature as the surrounding earth, which is much cooler than the air in summer and much warmer in winter.

In winter, a heat pump extracts the heat contained in the circulating fluid to heat the building. In summer the system is reversed, with heat taken out of the building and transferred underground via the fluid. The heating and cooling components inside the home are the same as in a standard ducted system.  There are a few greenfield projects seeking to use the technology.

In Victoria there is work underway to develop a embedded geothermal network for a housing development at Wallan – with modelling showing that switching out of gas and using geothermal heat pumps for heating, cooling and hot water and using electrical cook tops, 1000 homes would deliver emissions savings of 1960tonnes CO2/year. 

Australand has previously announced that around 800 new home sites at its Fairwater community development at Blacktown in Western Sydney will incorporate provision for heating and cooling using geoexchange. Another residential development, Fairwater, which launched in late 2018, claims to be the largest residential development using geothermal technology in Australia. 

Hydrogen is also a promising technology that has the potential to supplement existing decarbonisation efforts and become an export industry. But it may still be some way off.  Even Siemens which is developing critical hydrogen infrastructure has flagged earlier this year that large-scale green hydrogen could take some time to reach commercial viability.

There does appear to be great potential for hydrogen to replace natural gas for industrial processes. The emissions from industrial processes requiring feedstock gas and intense heat represent some of the most challenging emissions to eliminate. Depending on the process, either electricity or hydrogen may be the most cost-effective solution to replace gas.

On the home front there is currently not compelling evidence that hydrogen will be optimal for substitution of natural gas for cooking, space and water heating in residences and businesses.

Biogas appears to offer a partial solution to decarbonisation, however its role in reticulated gas and substitution for gas-fired generation is expected to be limited. Nevertheless, when biogas is converted to biomethane it can be injected into existing gas networks without requiring capex to modify the networks.  This provides scope to partially decarbonise reticulated gas usage in the transition process and extend the useful life of existing gas network infrastructure.

Achieving decarbonisation and net zero emissions by 2050 will require a suite of technologies and we may find that some of those may be transitional as we move to the end goal. 

[i] Examples include: the differences between the current generation mix and that of 1997, implementation of the Renewable Energy Target; implementation and subsequent removal of the Carbon Tax; and the implementation of numerous state government emissions reductions schemes.

Related Analysis


Gas outlook highlights peaking plant role in transition

Apart from raising some alarm bells over future potential gas shortfalls, the release of the Australian Energy Market Operator’s assessment of gas needs again highlighted the important role gas generation will play in the energy transition.  Gas generation is seen increasingly as a “strategic reserve for power system reliability and security” and “will be critical when it runs”. We take a look. 

Apr 04 2024

Negative prices and revenues in the NEM over the past decade

Negative prices have become an increasing feature of the NEM. Here we explore negative spot prices through the lens of negative spot revenues as well as their ratio to positive revenues. Additionally we assess the possible outlook for negative prices/revenues and consider other supply and demand metrics that may influence future negative prices/revenues.

Apr 04 2024

How to make the transition to EVs: Inquiry looks for answers

The House of Representatives Standing Committee on Climate Change, Energy, Environment and Water is expected to inquire into and report on the transition to electric vehicles (EVs) and has been taking public submissions to inform its considerations. For transport, electrification is the obvious solution to assist this sector begin to decarbonise. Part of the inquiry’s focus is on the issues related to the supply and sale of electricity for EVs and EV integration more broadly. We take a look.

Mar 28 2024
Do you have a question or comment for AEC?

Send an email with your question or comment, and include your name and a short message and we'll get back to you shortly.

Call Us
+61 (3) 9205 3100