Australia’s south-east coast will be further guaranteed gas supply in an effort to keep lights on and energy bills affordable before predicted supply shortages at the decade’s end.
It comes as the prime minister, Anthony Albanese, has called Labor MPs and senators to Canberra on Wednesday for a snap caucus to discuss further cost-of-living relief measures put forward by Treasury.
The new deal between the federal government and the gas giants Woodside and Esso announced on Sunday evening will see 260 petajoules supplied to gas-fired power stations in Australia’s south-east coast until 2033 under an enforceable supply commitment as part of the gas code.
It follows a commitment announced in November by the energy minister, Chris Bowen, and the resources minister, Madeleine King, that APLNG and Senex will deliver up to 300 petajoules by 2030, with 140 petajoules due by the end of 2027.
Under the Albanese government’s gas code, energy companies are exempt from the price cap on gas of $12 a gigajoule for the domestic market if they agree to supply commitments to the east-coast market.
The deals are expected to ease the risk of power shortages along the east coast as predicted in reports by the Australian Energy Market Operator last year.
The market operator warned in February that “reliability gaps” could emerge from 2025 onwards with a handful of coal-fired power stations dropping out of the national electricity market. From 2027 all mainland states in the national electricity market are forecast to breach the reliability standard, Aemo’s chief executive, Daniel Westerman, warned.
Bowen said gas was “critical to supporting a lower-cost, more renewable grid as ageing coal exits”.
“The Albanese government’s gas code has now delivered commitments for gas supply that’s equivalent to what is needed for powering east-coast gas power stations for five years,” he said.
The Labor government has set a renewable energy target of 82% by the end of the decade. Bowen has previously said gas is “fundamental” to the energy transition due to its flexibility to be switched on or off within minutes to support variable renewable energy sources.
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Energy bill relief will be among the discussion points at Labor’s Wednesday afternoon caucus, which is expected to centre around cost-of-living support for Australian households.
Albanese will deliver a speech at the National Press Club on Thursday, where it is expected he will unveil the federal government’s plans for 2024.
The prime minister flagged last week more relief would be on the way before the May federal budget.
“Cheaper medicines, cheaper childcare made a big difference last year. Fee-free Tafe itself, if you’re going to Tafe and not paying for it that makes a big difference,” Albanese told Triple M on Wednesday.
“But we’re looking at other measures as well. We’ll be making announcements in the lead-up to the budget. I’ve asked Treasury and finance to continue to come up with ideas in ways in which we can assist with cost of living, but without putting pressure on inflation.”
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