Falling gas demand and a surge in batteries and electrification have delayed forecast supply shortfalls – but only for now.

The 2026 Gas Statement of Opportunities (GSOO) – the Australian Energy Market Operator (AEMO) annual summary of gas supply and demand, published Thursday – says increased supply capability and moderating demand has strengthened short-term gas adequacy, delaying any major gaps in supply to 2030.

“The 2026 GSOO highlights a peak day shortfall risk in the southern states in 2029 under sustained high gas usage conditions, and a structural gap from 2030 under most weather conditions with new gas supply required to address the projected annual supply shortfall.”

“The forecast shortfalls could impact any of the southern states, including Victoria.”

In the meantime, the report says, total gas consumption is forecast to decline as businesses join the rush of households choosing to electrify appliances and operations and reduce their reliance on reticulated gas supplies.

In this regard, the trend of declining gas consumption in the 2026 GSOO is steeper than what was projected in 2025, AEMO says, as electrification of the industrial sector is projected to gather pace as a preferred pathway to emissions reduction relative to alternatives.

In the National Electricity Market, gas‑powered generation demand is also expected to fall below previous forecasts, according to the report, driven by around 30 gigawatts (GW) of battery storage under development, as well as the delayed retirement of the Eraring coal plant in New South Wales.

The latest projections from AEMO continue the  trend set last year, when the forecast gas shortfalls were pushed out by three years, with annual supply gaps forecast to emerging from 2029 – compared the 2024 forecast of peak-day shortfalls as early as 2025 and supply gaps from 2026.

Federal energy and climate minister Chris Bowen says the extra year of grace before supply gaps might need to be filled shows the Albanese government’s energy plan is working.

“This report shows practical action is making a difference,” Bowen said on Thursday. “More renewables, more batteries and sensible gas policy are improving energy security and putting Australia in a stronger position.

“For the first time in 2025, more than half the grid was powered by cheaper, cleaner energy that’s generated by renewables, backed by battery storage and gas peaking when needed, which puts downward pressure on energy bills.

“At the same time, we have secured up to 644 petajoules of gas for Australians, helping ensure reliable supply for households, industry and the electricity grid.

“That is what a responsible energy policy looks like, backing in the cleaner, cheaper energy of the future while making sure the system stays reliable every step of the way.”

The added breathing space in forecast domestic gas demand adds to the  welcome news last week that wholesale electricity prices are likely to come down in the 2026-27 financial year, also thanks to the surge in grid-scale battery energy storage as well as an uptick in wind generation.

But both of these forecasts have come with the caveat that they were drafted before the latest escalation of conflict in the Middle East and might be subject to change, depending on the length of the war in Iran and the breadth of the associated geopolitical fallout.

AEMO also stresses that as gas production from legacy fields in southern states start to decline and the nation’s ageing coal plants start to retire, it is expected that new investments will be needed to address emerging supply gaps from 2030.

“While the gas supply outlook has slightly improved, it remains important that committed and anticipated gas production, storage and pipeline projects are completed on time, alongside developments in the electricity market,” says AEMO’s executive general manager of system design, Nicola Falcon.

“Industry is considering a number of supply, storage and transportation projects that are currently uncertain, which if committed, may [further] delay forecast shortfalls,” Falcon says.

On the demand side, AEMO says annual demand for gas power generation (GPG) on the NEM is expected to remain broadly similar to today’s levels, but will become “more peaky and seasonal.”

“As GPG changes from regular mid-merit operations to a flexible back-up role, its output will increasingly be concentrated into shorter periods of high need,” the report says.

“GPG is already playing a crucial role in maintaining electricity system reliability during infrequent periods of widespread low renewable generation – such as extended ‘dark and still’ events – as well as providing essential system security services that support overall grid stability.

“The Draft 2026 [Integrated System Plan] reaffirms that renewable energy, firmed with storages (such as batteries or pumped hydro energy storage), backed up by GPG and connected by upgraded electricity networks, presents the least-cost way to supply secure and reliable electricity to consumers, while meeting government policies,” the GSOO says.

Republished from _Renew Economy_ 26 March 2026