East coast gas: Why prices could rise faster in Sydney and Melbourne - CommBank

CommBank has forecast that east coast gas prices could rise faster in Sydney and Melbourne than in other regions, driven by tightening supply and rising demand as the grid transitions toward renewables.

Where this fits

This is a cost and reliability story, and it exposes a structural tension in Australia's electricity transition. A renewables-only grid needs gas for firming: when the sun sets and wind drops, dispatchable gas plants fill the gap. Rising gas demand for that firming duty, combined with export competition and supply constraints, pushes up the fuel cost. The grid is being built to depend on an input whose price is climbing and whose scarcity is now regional. This is the hidden cost of weather-dependent generation: it locks in long-term dependence on a volatile commodity to keep the lights on.

What it means

Australia is betting its energy security on two things that are working against each other. Renewables are displacing dispatchable coal, which means more gas is needed to firm a variable grid. At the same time, gas supply is tightening and regional price pressure is building. This is not a supply-chain problem that time will fix; it is a physics problem. Solar and wind cannot firm themselves. A large, firm, low-emission alternative exists in nuclear power, but it remains banned by law. The east coast is building a grid that will need more gas, at higher cost, for longer, while foreclosing the one technology that would break that dependence and lower both emissions and long-term fuel risk.