Why we should minimise our winter electricity consumption, and get rid of gas

Southern Australian states have relied heavily on large amounts of fossil gas from Bass Strait and gas-fired electricity for over 50 years. Those gas fields are in rapid decline, as was predicted decades ago.

These undersea gas fields are ‘water driven.’ As gas is removed, water has replaced it, which has maintained supply pressure and output. But there is not much gas left, so the water pressure can’t maintain high rates of supply.

Southern Australian daily gas and gas-fired electricity consumption is much higher in winter than in summer – often more than three times summer demand.

Victoria’s Bass Strait gas fields will still export excess gas northwards for summer and in mild weather for some time.  But they will not be able to supply the much higher local gas demand in winter months, as shown by the purple (direct gas use) and yellow (gas-fired electricity use) above the solid purple line (southern supply) in the graph provided by the Australian Energy Market Operator (AEMO).

The main drivers of peak winter gas demand are gas heating and hot water for existing household and commercial buildings, and gas fired electricity generation for existing building heating, appliances and equipment

Gas use in industry is less peaky but still big.

So AEMO is concerned about emerging winter gas shortfalls.  

Most public discussion has focused on how to increase winter gas supply. But there are serious problems with this approach.

Small consumers pay retail prices for energy. This price is dominated by network charges, retailer margins, GST and other factors. The wholesale price of energy is a relatively small component.

If demand is peaky - when it fluctuates significantly throughout the day or year - most of those costs will increase because large investment costs will have to be recovered, even if more cheap renewable energy is used. And the suppliers of energy at peak times will have more capacity to use their market power to charge even higher prices.

Winter gas supply options are: imported Liquefied ‘Natural’ Gas (LNG) via new gas import terminals, gas extracted from the environmentally destructive Coal Seam Gas resources in northern Australia, or gas from small gas fields that may be identified and exploited in other southern areas, after seismic blasting causes serious environmental impacts on sea creatures.

These are all more expensive and carbon intensive, and LNG terminals and new gas fields take time to come on-stream.

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Thermally inefficient buildings drive up winter gas use

If we look at the demand side, it’s pretty obvious that winter gas demand in southern Australia (NSW, Victoria, South Australia and Tasmania) is driven by our thermally inefficient, unhealthy buildings being heated by inefficient gas and electric heating, as well as inefficient electric appliances.

Improving building and heater efficiency cuts winter peak gas and gas-fired electricity demand and cost, but it does much more. A better building needs a smaller, cheaper heater.

Better buildings are also more comfortable, reduce mould and condensation, and cut health care costs. Sustainability Victoria’s Healthy Homes report showed improving building efficiency led to reductions in health care costs worth ten times more than energy cost savings for elderly people.

A thermally efficient building can also remain comfortable for longer when energy supply fails, or demand response incentives reduce heating or cooling energy use for a while.

It may sound odd that electricity use is creating our winter gas supply problem, but the yellow parts of AEMO’s graph show that gas-fired electricity generation drives high winter gas demand.

Electric fan heaters and radiators amplify this peak. Inefficient electric appliances often waste electricity all year, not just in winter. For example, a high efficiency washing machine can save $1200 over ten years.

Winter solar generation is lower than in summer, especially in southern areas. Days are short, the sun is low in the sky, and it is often cloudy. For periods of days at a time, Melbourne winter solar output is less than a quarter of summer output. If there is also low wind at that time, reliance on other generation options, often at high prices and carbon emissions, is high.

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The high winter electricity demand also allows both hydroelectric and gas-fired generators, which are flexible, to use their market power to set high spot market electricity prices, because our energy market is broken. Generators charge what we are prepared to pay to keep warm and our lights on, not what it costs to supply electricity.

In the future, not only hydro and gas fired generators will set prices, but battery storage providers will also try to maximise profits and cover capital costs spread over limited amounts of electricity due to their intermittent use.  

We need to minimise our winter electricity consumption while delivering the services we value. Even in sunny Queensland, winter solar generation is significantly lower than in summer, and many Queensland homes are thermally poor, so their occupants use inefficient, expensive to operate electric fan heaters and radiators to try to keep comfortable in winter.

To put this in context, a home with a 6-star energy rating will need less than a third as much heating energy as a 2-star one. And an efficient reverse cycle air conditioner (RCAC) provides a given amount of heat using a fifth as much energy as a gas heater.

Combining the need for less heat and the high efficiency of the RCAC means the efficient electric home will need less than a tenth as much purchased heating energy as an inefficient gas-heated home.

Even though grid electricity is more expensive per unit of energy than gas at present, it costs less to heat the efficient all-electric home and avoids the fixed charges of gas connection if it is all-electric.

Efficient electricity use in winter for appliances such as TVs, IT equipment, lights and water heating as well as space heating will be increasingly important. High peak demand will drive higher electricity prices and increase the risk of shortages.

While future summer peak demand may still be higher at times than in winter, the longer periods of heating and low solar generation in cloudy winter weather will create the risk of high winter prices.

The costs and complexities of ‘going off gas’.

For new homes, going off gas is pretty straightforward and clearly cost-effective.

However, for existing homes to shift, working through how much capacity of wiring is needed, selecting quality products that will work well in likely situations, and futureproofing by thinking about smart battery storage as well as rooftop solar, EV charging and possible future business models applied by energy service providers, adds challenges.

Governments have failed to ensure that decision makers and advisers have quality information, and to clamp down on extravagant claims.

For existing homes, the transition off gas can be messy. Useful information resources are being developed and provided by community groups, governments and others. But there is a lot of conflicting advice. And many unknowns.

Many suggest just replacing appliances as they fail. Many ignore the importance of upgrading building energy performance to minimise the capital and operating cost and complexity of heating and cooling systems. Many advocate expensive upgrading of internal wiring and even upgrades to 3-phase power from the street.

The cost of ‘abolishing’ a gas connection, and how it should be done, have been moving feasts. The Australian Energy Regulator has decided on an individual fee of $220 with the rest of the cost to be paid by remaining gas consumers. But so far this only applies in Victoria.

In other states and territories the abolishment cost can be much higher. As more people abandon gas, this will clearly not be a long-term solution. The present ‘preferred approach’ of ripping up all the gas pipes and sealing the connection at the point of supply will cost around $4 billion.

Yet there has been no visible research into smarter, cheaper options. It’s not in the interests of the gas industry to make shifting from gas cheap.

In my view we could do this safely at much lower cost.

A key benefit of completely disconnecting from gas is the saving on fixed supply charges, which varies widely by state and gas retailer, but can be big. This is additional to the likely ongoing operating savings for those using efficient electric solutions.

Electrical wiring standards are outdated, so they require unnecessary wiring upgrades. Power ratings of appliances provided by manufacturers often reflect ‘extreme possible’ electricity consumption, which encourages electricians to recommend major rewiring costs.

Many older homes designed for gas appliances do have relatively low capacity wiring. And there is a case for them to update old fuse boxes to modern circuit breakers and safety devices.

In my own case, I have shifted from gas without upgrading my limited capacity wiring, and my peak demand does not seem to have exceeded half of the 10 kilowatt (40 amp) wiring from the street.

I am a small, efficient household that uses 4.5 kilowatt-hours per day on average and less than 10 kilowatt-hours on a peak winter day, so I can’t claim to be typical. But I suspect a lot of people are spending more than necessary on the transition off gas.

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Get rid of gas

We need to remove gas from building energy use as fast as possible, especially during winter in southern Australia. It is feasible and, in most cases, financially attractive despite possibly significant up-front costs. It will potentially deliver multiple benefits including health, comfort, safety and more stable temperatures in homes – and a rapid path towards zero emissions from building energy use.

It’s a challenging task if you have an existing building. Governments, product and service providers, energy retailers and networks, and energy policy makers must do much better.