As Australia’s energy system accelerates towards a renewables-led future, debate around the role of gas‑fired power generation has intensified. Too often, this discussion is framed as a dual choice – renewables versus gas – when the reality is far more nuanced.
“We need to move away from what has been quite a binary debate around our energy sources,” Beca market director – energy Benjamin White said.
“It can’t be all renewables or all fossil fuels, as that framing doesn’t help us advance the transition, in fact, I like the expression ‘energy expansion’ as it helps open the door for all forms of energy to play a role, which is a more prudent objective.”
From Beca’s experience supporting energy developers, investors and large energy users, gas-fired generation continues to play a critical role in Australia’s energy mix. Its value lies not in competing with renewables, but in enabling and optimising variable generation by firming the profile of supply, supporting system security and providing confidence for long-term investment in an expanded energy future.
The evolving role of gas in a renewables-led grid
Over the remainder of this decade, gas-fired power generation is expected to move towards high value, strategic use. As wind and solar become the dominant sources of electricity, gas increasingly acts as a system and industrial demand backstop.
“Gas provides a firming capability to what is otherwise variable renewable generation, and it compliments both short and long duration energy storage,” White said.
He adds that gas delivers more than just energy when dispatched, providing “fast‑start peaking and firming benefits”, while also contributing to “system strength and system security when the grid needs it most”.
“This is important through a whole of system shift,” White said.
While battery storage is expanding rapidly, it is not yet able to fully cover prolonged periods of low renewable output, particularly during winter peak demand. In this context, gas serves as a form of insurance for the power system and for major load customers, albeit, used sparingly, but critical when conditions demand it.
Reliability, affordability and the role of domestic gas supply
From a system reliability perspective, the value of gas-fired power generation is closely tied to access to secure and affordable fuel. This is especially pronounced on Australia’s east coast, where generators rely on short notice supply to respond to renewable variability and cold weather demand.
White is clear on the importance of domestic supply.
“Domestic gas availability is absolutely critical,” he said. “The more gas that stays in Australia for Australian purposes, the better it is for our domestic energy security, system reliability and sustained economic activity.”
Tight domestic supply conditions have become a recurring feature particularly for winter periods, driving higher gas prices and, in turn, higher wholesale electricity prices.
“When gas prices rise,” White said, “we see electricity prices rise in parallel, because gas still sets the marginal price in the national electricity market.”
Greater domestic supply, including mechanisms that prioritise local use, can help stabilise prices and improve confidence not only in gas-fired power generation, but across the broader energy transition.
Market settings, investment confidence and project viability
Despite the recognised system need, many gas power generation projects have struggled to reach a final investment decision. From White’s perspective, the dominant constraint is fuel certainty.
“Of all the challenges facing gas power generation projects,” he said, “confidence in fuel supply is the biggest barrier to reaching final investment decision.”
This is compounded by global supply chain pressures.
“Gas turbines are highly specialised equipment,” White said. “There are long manufacturing lead times and strong global demand, so projects can only really proceed once that supply is secured with confidence, both volume, price and location.”
Clear regulatory settings, secure gas contracting and early resolution of grid connection risk are therefore central to improving bankability and accelerating project delivery.
Gas may remain in the dispatch stack longer than expected
Despite expectations that gas use will decline over time, structural constraints such as transmission delays, storage limitations and growth in new loads, including data centres, are likely to keep gas-fired generation in use longer than many had expected.
“A number of major energy users are seeing gas power generation as a reliable guarantee, particularly where renewable energy, storage and transmission projects are facing delays,” White said.
This has led to growing interest in hybrid energy solutions.
“When you step back and look at projects more holistically,” White said, “combining wind, solar, batteries and gas can create stronger business cases and more resilient outcomes.”
Decarbonisation pathways for gas‑fired power
Decarbonisation remains the challenge for gas generation projects, but White emphasised the importance of pragmatism.
“There are proven pathways to reducing emissions from gas power generators,” he said, “but they are often challenging and high cost. The key is balance, like using gas at the right times, in the right way, and improving efficiency wherever possible.
“Better technology, smarter operating profiles and integration with renewables can all reduce emissions intensity while maintaining system reliability, while optimising returns.”
Moving beyond the binary debate
Perhaps the most persistent misconception in Australia’s energy debate is that gas and renewables are competing alternatives. White is unequivocal on this point.
“We need to remove the idea that it’s either renewables or gas,” he said. “What we actually need is the right mix, in the right quantities, in the right locations.”
When planned and integrated effectively, gas and renewables work together to deliver what the energy transition ultimately demands which is affordable, reliable and sustainable energy for consumers, industry and communities.
As the transition accelerates, the projects that succeed will be those that consider generation, fuel supply, grid connection and emissions performance together rather than in isolation.
“The outlook for energy and fuel security in Australia has now come right into sharp focus with geopolitical instability and conflict,” White said.
“It’s a chance for us to galvanise our efforts and find synergies between asset classes, sectors and investment cases, and find the right mix of technologies in the right locations, and that way we will start to see stronger business cases and more resilient and sovereign outcomes.”
With deep advisory, industrial and engineering capability across gas fired generation, renewables, storage and grid integration, Beca is supporting clients to navigate these complexities early, helping projects move more quickly from concept to investment decision and delivery in a rapidly changing energy system.
To learn more, visit Beca’s website.
