Gas and energy policy

By Jordan McCollum, National Policy Manager, APGA

A new study commissioned by APGA confirms that gas infrastructure, both now and in the future, is more affordable thatnelectricity infrastructure for energy transport and storage.

The Australian energy industry has long known that gas pipeline infrastructure provides lower cost energy transport and storage than electricity infrastructure and now a study from GPA Engineering has confirmed this remains the case for natural gas and hydrogen pipelines alike.

Determining that natural gas and hydrogen pipelines cost less than electrical infrastructure indicates a bright future for the Australian pipeline industry. As Australia progresses along its pathway to net-zero, investment in new methane and hydrogen pipelines will represent the least costly pathway to market for supplying renewable and decarbonised gases to Australian energy customers.

Energy cost and reliability will remain key issues for energy customers in Australia. While the net-zero transition is well under way for electricity customers, the transition to net-zero gas use has only just begun.

Many renewable energy advocates champion an 'electrify everything' approach to decarbonisation, betting heavily on the ability of electricity infrastructure to absorb the large intraday and intersessional demand variations currently born by gas infrastructure. Even those who see the value of hydrogen tend to count on electricity infrastructure to transport energy to electrolysers close to the customer.

These views are understandable where pipeline infrastructure is not well understood. If people aren’t aware of a lower cost option, it would be easy to advocate for electricity infrastructure. APGA commissioned GPA Engineering to produce the Pipelines vs Powerlines technoeconomic report to address this knowledge gap.

To address this gap, GPA Engineering undertook a like-for-like technoeconomic analysis of new natural gas pipelines, hydrogen pipelines, high voltage alternating current (HVAC) powerlines and high voltage direct current (HVDC) powerlines. As pipelines can both transport and store energy, battery energy storage systems (BESS) and pumped hydroelectric energy storage (PHES) were also compared to a technoeconomic analysis of energy storage in natural gas and hydrogen pipelines.

Analysis was undertaken across a range of distance, throughput and storage volume scenarios. The study set the boundary of its analysis to include only the energy transport and storage infrastructure itself to avoid working in the relative costs and efficiencies of specific energy supply and demand scenarios. This was a key point of the study to ensure that the data produced could be used by anyone seeking to analyse energy transport pathways in the Australian context.

The results of the GPA Engineering analysis were clear. As seen in the associated diagrams, energy transport and storage by pipeline was found to be lower cost compared to energy transport by HVAC or HVDC powerlines and energy storage via BESS and PHES. While the associated diagrams display scenarios central to the analyse case map, the order of affordability remained for all cases with the exception of one case where HVDC transport was found to be lower cost than HVAC transport.

As demonstrated in a worked example within the study, lower cost energy transport and storage are only part of the story. When supplying hydrogen customers, hydrogen pipelines enable electrolysis to be collocated with the energy source, rather than with the energy customer.

This provides access to low cost behind-themeter renewable electricity and means less energy needs to be transported via the hydrogen infrastructure, ultimately resulting in a lower cost of hydrogen for customers. This is because energy consumed through electrolysis no longer needs to be transported as would be the case if electrical infrastructure were to be used.

The results of this study should be a point of celebration for the pipeline industry and renewable energy industry alike. Identification of a lower cost form of energy transport and storage brings the least cost pathway to net-zero energy in Australia one step closer to reality.

This may take some time as it will require a substantial change from the electrify everything approach to include gas use decarbonisation. At the end of the day, the economics will speak for themselves, with an integrated renewable gas and electricity future becoming the more progressive approach towards whole of energy system decarbonisation in Australia.

Levelised cost of storage.