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Energy transition – getting comfortable in the chaos

Linda Nieuwenhuizen

4 Dec 2024

Finding solutions for residential and business customers is important, but in our region, finding answers that maintain and even improve the competitiveness for our regional manufacturers is urgent and critical

Victoria is the largest user of gas, and we are the only Australian state where residential and commercial gas use exceeds industrial gas use. In fact, more than 60 % of Victoria’s total gas consumption goes to heating and hot water in homes and businesses – for the rest of Australia residential and business use averages 36% of total demand.


But that’s where we are a bit different. Across the three LGAs of Greater Shepparton, Moira and Campaspe, 0.07% or 32 industrial customers use 70% of all the gas consumed in the region. And while we make up around 3% of Victoria’s total gas use, we represent nearly 8% of Victoria’s industrial gas use.


Victoria’s reliance on gas is no surprise – for many years we enjoyed access to Gippsland’s abundant and relatively cheap gas resources. This changed in 2015 when the decision was made to allow gas (LNG) exports from Queensland which linked Australia’s gas prices are to international markets. It also coincided with what AEMO describes as Victoria’s ‘declining peak day capabilities due to legacy field depletion’.


In more recent years, gas prices have increased as nations shift away from fossil fuels and call on gas to smooth the lumpiness of the transition. This is great for Australia’s gas exporters – but not so great for Australian consumers, and especially for ‘a temperature-sensitive southern market’ (according to AEMO).


Given Victoria’s exposure to gas markets it’s no surprise it’s a priority for the Victorian Government. The Victorian Government has been focusing its efforts on residential and business programs and incentives to encourage electrification – but there’s a catch – our reliance on gas means we also have one of the most extensive gas transmission and distribution networks. In fact, Victoria is home to more than 60 % of Australia’s gas distribution network. Reducing use of the network without reducing the infrastructure means the ongoing costs are carried by a smaller number of remaining users (there’s more than a few parallels with our irrigation networks!). 


Finding solutions for residential and business customers is important, but in our region, finding answers that maintain and even improve the competitiveness for our regional manufacturers is urgent and critical - for these businesses, and for the $5.5 billion of economic activity they generate every year, the 6200 locals they employ, the $500 million of wages they inject into the local economy.


This is where the conversations and possible solutions for energy generation, storage and distribution are many, varied and need to progress at speed and all at once. The options for our food processors will be different to the high heat solutions needed by our steel fabricators and foundries.  The onsite options for a new plant will be very different to a site that’s been in operation for more than a century.


It’s also why energy transition needs to be an ‘and’ not an ‘or’ conversation – generation and transmission and storage, electrification and gas alternatives like biogas.


With so much happening there is often a desire to masterplan or to get lost in the weeds – trying to pick energy generation winners while overlooking local transmission, distribution and storage constraints, or assuming our manufacturers have the same kit, capital and site capacity.


As a region we need to comfortable in the chaos – and we need to be confident in speaking to the scale, importance and positive future that’s possible for our regional manufacturing and value adding sectors if we get the transition right.     

Office:

144 Welsford Street,

Shepparton 3630

Mail:

PO Box 603

Shepparton 3632

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We acknowledge the Traditional Custodians of Country and recognise their continuing connection to the land, water, air and sky; culture and community. We pay our respects to their Elders past and present.

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