PERTH (miningweekly.com) – New data by the Australian Energy Market Operator (AEMO) has found that there is no shortage of gas supply and that there is a low risk of electricity shortfalls for an average summer in 2017/18.

“Following the release of our Gas Statement of Opportunities in March, the Energy Supply Outlook (ESO) analysis suggests gas supply remains tight; however, the latest industry projections of gas production are just sufficient to meet current projections of gas demand,” AEMO CEO Audrey Zibelman said on Thursday.

“Gas availability on the supply side, together with new initiatives to reduce peak demand via demand side management, will form a formidable combination in managing power system security during those hours on the very few extreme condition days per year,” he noted.

In its inaugural ESO, AEMO noted that while gas supply was sufficient to meet demand over the next two years, the power system remained susceptible to extreme conditions.

“The power system is changing, and this latest analysis indicates there will be challenges that will need to be managed proactively on days of extreme conditions to maintain secure, reliable and affordable energy to Australian consumers,” Zibelman said.

The ESO found that the reliability standards set by the Australian Energy Market Commission will be met within all national electricity market regions over the next two years; however, a risk of supply shortfalls exist should there be failures or limitations on generation or transmission, or low wind and photovoltaic generation conditions coincide with very high demand across South Australia and Victoria at the time of peak demand in the day.

“The reliability standard is a strong planning benchmark for the industry; however, it does not assure consumers will have power when they need it most, such as during extreme peak demand periods.

“AEMO is collaborating closely with governments and market participants to evolve capacity within the power system to meet peak demand during critical summer periods for the immediate two-year horizon,” said Zibelman.

The Australian Petroleum Production and Exploration Association (Appea) on Thursday welcomed the report, saying it showed there was no need for the federal government to restrict liquefied natural gas (LNG) exports from Australia.

The federal government in April announced the Australian Domestic Gas Security Mechanism (ADGSM), which would see the Minister for Resources impose export controls based on advice from the market operator and regulator.

If an exporter is not a net contributor to the domestic market, meaning, they draw more from the market than they put in, they will be required to outline how they will fill the shortfall of domestic gas as part of their overall production and exports.

Appea CEO Dr Malcolm Roberts has warned that the ADGSM is a sovereign risk issue for Australia and undermines the country’s reputation as a safe place to invest.

Roberts says that by discouraging investment in new gas supply, the ADGSM risks exacerbating the very problem it is meant to solve.

“The market is responding to tightening supply. In recent months, the industry has announced new projects to boost gas production, showing its commitment to providing secure and reliable energy.”