Research and other reports

Supply chain analysis methodology for Total Customer Cost

The task of decarbonisation couldn’t be more important and is extremely challenging. The challenge is exacerbated by simple assumptions on the cost of decarbonisation pathways based upon the cost effectiveness or efficiency of individual components of energy supply chains. What matters most are the impacts on customer cost as a result of end-to-end energy supply chains.

The APGA study ‘Supply chain analysis methodology for Total Customer Cost’ analyses customer costs based on the entirety of energy supply chains. The study demonstrates the households which continue to use gas will enjoy lower cost heat in the home compared to those that electrify their gas demand, and that renewable gases can deliver a cost competitive solution to gas use decarbonisation for these homes.

While this study challenges the paradigm that electrification is the only approach to decarbonising household gas demand, framing of the methodology is only the first step in confirming these outcomes. Publication of this analysis will be followed by application of the methodology by an independent third party consultant which will include outside views on energy decarbonisation statistics to consider. Details on how you can become involved in the next stage of this analysis can be found within the Study Summary.

Supply chain analysis methodology for total customer cost - Study.

Supply chain analysis methodology for total customer cost - Study Summary.

Supply chain analysis methodology for total customer cost - Study Data.

Episode 2: Jordan McCollum - Economics of the renewable gas transition - Hydrogen Symposium 2022.

Creating Cultural Change to Support Gender Equality in Engineering (and in The Oil, Gas and Pipeline Industry)

Initiatives such as policies against harassment and discrimination, recruitment quotas, and female oriented programs and networking opportunities have been introduced over the last couple of decades in order to foster better working environments for women in the Australian pipeline and gas industry. However, gender equality is still a work in progress.
A survey of employees in the Australian pipeline and gas industry was conducted to explore the experiences of current members of the industry with regards to gender equality. The results are presented in this paper in the format of stories direct from the survey respondents.

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Economic and Employment Contribution of the Australian Gas Industry Supply Chain: 2020-21

Gas is essential to almost every part of our lives: creating local jobs, supporting regional communities and driving the national economy.

All Australians benefit in some way from gas and the gas industry supply chain.

Economic and Employment Contribution of the Australian Gas Industry Supply Chain: 2020-21, published in February 2022, demonstrates the important contribution of the gas industry supply chain by analysing the industry’s employment, apprentices, economic value, taxes paid and other economic indicators.

From gas plumbers to appliance retailers, manufacturers to minerals processors, explorers to engineers – the gas industry supply chain creates jobs and opportunities across our suburbs and regions. The report was commissioned by the Australian Gas Industry Trust (AGIT) on behalf of Australia's peak gas industry bodies, including APGA.

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Pipelines vs Powerlines: a Technoeconomic Analysis in the Australian Context

The cost and reliability of energy transport and storage infrastructure is a crucial issue in the energy industry, with implications for energy access, affordability, the environment and public safety. APGA commissioned GPA Engineering to produce a report to analyse the cost of energy transport and storage across a range of different gas and electricity infrastructure options. This summary document uses data from the full report (available via the link at the end of this item or via the resources below) to provide the information in a way that can inform all readers.

As part of the GPA analysis says, to date, pipelines have been a lower cost form of energy transport compared to powerlines. The track record of pipeline infrastructure shows that it is more reliable and more environmentally friendly than electricity infrastructure.

As the Australian transition to net zero-energy ramps up, a sound understanding of the whole energy system, including energy transport and storage infrastructure, will ensure the least cost decarbonisation outcomes for the nation. Recognising this, APGA sought technoeconomic analysis looking at the historical and anticipated costs of pipelines and powerlines over a range of energy capacities, distances and quantities of energy storage. Cases span distances of 25km to 500km, energy throughput of 10 terajoules a day (TJ/day) to 500TJ/day, (equal to 116 megawatts (MW) a day to 5800MW/day or 70 tonnes of hydrogen a day to 3520t H2/day). Also studied were energy storage quantities of 4 hours, 12hr and 24hr of transport throughput capacity.

Through this analysis, GPA Engineering has identified that energy transport via hydrogen pipeline costs up to four times less than via powerlines when comparing like for like distance and capacity scenarios. Further, energy storage in hydrogen pipelines costs up to 37 times less than battery energy storage systems (BESS) and up to 10 times less than pumped hydro energy storage (PHES). These figures are even greater for methane pipelines, making energy transport and storage or renewable sources of methane more cost effective than renewable sources of hydrogen.

Download the Full Report.

Download the Summary.

Download Appendix 3A and 3B Results Summary.

The role of gas in the transition to net-zero generation

This report by Frontier Economics prepared for the Australian Gas Industry Trust and Jemena assesssed the role of gas-powered feneeration of electricity in the the coming decades. The report found that in an electricity system increasingly transitioning to intermittent renewable generation, gas-powered generation (GPG) is the least cost way to add capacity to the predicted mix of generation and storage in 2025. This finding holds when a carbon price equal to either the average Australian or average European price of carbon credits in 2020/21 is included.

The finding is based on Frontier Economics's estimates of the whole of electricity system cost (WESC), which accounts for the characteristics of generation and storage capacity that the system needs to maintain reliability and stability. In contrast, estimates of the levelised cost of electricity (LCOE), which are often used to compare the relative costs of generation and storage technologies, do not account for the extent to which each generation and storage technology contributes to reliability and stability. This means that LCOE does not account for the full cost to the system of investments.

Estimates of WESC also indicate that the flexibility and dispatchability provided by GPG becomes more valuable to the system over time, as the system increasingly transitions to intermittent renewable generation.

Download The Role of Gas in the Transition to Net-Zero Power Generation - Summary.

Download The Role of Gas in the Transition to Net-Zero Power Generation - Full report.

Future Fuels CRC Report: Underground Storage of hydrogen

Widespread adoption of hydrogen in Australia as an energy carrier will require storage options to buffer the fluctuations in supply and demand, both for domestic use and for export. Once the scale of storage at a site exceeds tens of tonnes,underground hydrogen storage (UHS) is the preferred option for reasons of both cost and safety.

This report examines the four main geological options for UHS: salt caverns, depleted oil and gas reservoirs, aquifers, and hard rock caverns and concludes that there are more than enough prospective storage areas, particularly in depleted gas fields.

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Future Fuels CRC Report: National hydrogen survey

A national survey of over three thousand Australians found that 65 per cent of Australians already support using hydrogen as a fuel and that rose to 90 per cent once respondents were provided with more facts about hydrogen and its uses.

The Future Fuels Cooperative Research Centre engaged the University of Queensland to conduct the national survey to better understand public opinion on using hydrogen and it showed widespread support for producing and using hydrogen both in Australia and for export. The results support the activities happening now in every State to develop Australia’s hydrogen industry.

The survey found:

• A total of 65 per cent already support using hydrogen as a fuel, with 32 per cent undecided. After finding out more about hydrogen this rose to 90 per cent support with only 7 per cent undecided and 3 per cent opposed.
• Support for hydrogen was broad-based with similar results across all States and main political party affiliations, with no significant differences, showing broad bipartisan support
• Respondents who currently use natural gas at home were slightly more supportive of hydrogen than respondents who did not, but the effect size was small which suggests that support for hydrogen is not related to current use of natural gas
• Awareness about hydrogen is growing, with 40 per cent of respondents having already heard about hydrogen in the media, 27 per cent had heard about hydrogen production projects in Australia, and 21 per cent about blending natural gas and hydrogen for domestic use
• A total of 75 oer cent of respondents believe climate change is already happening, which is an increase from an earlier 2018 ARENA survey (70.8 per cent).

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Future Fuels CRC Report: Integrated Electricity and Gas Systems Studies: Electrification of Heating

This report aims to demonstrate the potential capabilities of the integrated electricity and gas system (IEGS) modelling tool under development in conducting studies on the electrification of heating for the electricity and gas transmission networks of the state of Victoria as an initial testbed. In particular, the studies consist of assessing the impact of electrification of residential heating on the electricity and gas networks of Victoria, under the “Central” scenario in AEMO’s integrated system plan (ISP) for the year 2025.

The results from these initial studies demonstrate the efficacy of the modelling under development to support techno-economic assessments of future low-carbon scenarios and the importance of bottom-up integrated multi-energy sector, network, and system assessment with relatively high spatial and temporal resolution and suitable operating constraints, which are lacking in most if not all studies performed so far. Next steps envisage the extension of the Victorian system test case to the whole eastern gas transmission network and the National Electricity Market (NEM) transmission network.

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Potential for Gas-Powered Generation to Support Renewables

The Australian electricity sector is in transition to a future with net zero emissions. APGA engaged Frontier Economics to develop a robust and approachable evidence base on the role of gas-powered generation in that transition. This study shows that gas powered generation can play a significant role in a net-zero future by unlocking extremely high levels of renewable generation at low cost, while ensuring a secure and reliable system. Our modelling shows total resource costs are reduced by as much as 36 per cent when gas-powered generation is used to support a renewable electricity system.

Importantly, this study assumes that gas-powered generation will operate much as it operates today, while renewable technologies will continue to fall in cost. The gas industry is, however, seeing high levels of investment in innovation in zero carbon fuels — including hydrogen and biomethane — which have the potential to decarbonise Australia’s domestic gas usage, and underpin a new large-scale export industry. This study has not sought to investigate the additional role that these zero carbon fuels may play in the future in Australia’s electricity sector.

The key findings are outlined in the following subsections of the report:

• Gas-powered generation can provide support when renewable generation is not available, at lower cost than alternatives.
• Gas-powered generation provides security that supports high renewable generation.
• Gas-powered generation is a cost-effective way to manage renewable droughts.
• The insurance provided by gas-powered generation does not imply significant carbon emissions.
• Potential developments in the NEM assist gas-powered generation in insuring against renewable droughts.

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The Benefits of Gas Infrastructure to Decarbonise Australia

Frontier Economics was engaged by Australian gas industry associations to undertake a study on the benefits of gas infrastructure to decarbonise Australia.

The objectives of the study were to determine and document an estimate of the value of gas infrastructure in 2050, accounting for Australia’s carbon-emission commitments. Specifically, this includes:

• Assessing the challenge in decarbonising Australia for the generation, storage and transport of energy.
• Developing and considering gas infrastructure scenarios for overcoming the challenges of decarbonisation.
• Valuing each gas infrastructure scenario.
• Considering policy implications for realising the value of the optimal gas infrastructure scenario.

The study examined four scenarios: Base Case; Electrification Scenario; Renewable Fuels Scenario; Zero Emissions Scenario.

The major conclusions were:

• Making continued use of existing assets to deliver energy, such as the existing gas transmission and distribution network, where possible, can help avoid the material costs of investing in new assets to deliver energy, such as augmentation of the electricity transmission and distribution network.
• Our finding that both the Renewable Fuels scenario and the Zero-carbon Fuels scenario is lower cost than the Electrification scenario suggests that there is value in continuing to make use of Australia’s gas network and Australia’s natural gas resources to deliver gaseous fuels to end-use customers.
• Our finding that both the Renewable Fuels scenario and the Zero-carbon Fuels scenario is lower cost than the Electrification scenario suggests that policies to achieve net zero emissions should be broad-based and should not focus solely on promoting the electrification of all stationary energy end-use.
• There is significant uncertainty about technological developments and costs over the period to 2050. This means that the actual costs of the scenarios that we have examined will change over time, and new alternative scenarios will emerge over time. Policies to achieve net zero emissions that are broad-based, rather than focused solely on promoting the electrification of all stationary energy end-use, will enable energy sector participants and their customers to respond flexibly to these technology and cost changes to lower costs.

Download the report.