Major gas shortage could threaten Australia's power supply: AEMO

The Australian Energy Market Operator is due to release its annual gas statement today, and it looks like the news isn't good.

A plant that turns coal-seam gas, also known as coal-bed methane, into liquefied natural gas on Curtis Island, Queensland in Australia Source: AAP

A major gas shortage could threaten the nation's power supply in several states in coming years, a new report warns.

The assessment by the Australian Energy Market Operator is expected to predict widespread shortages in New South Wales and South Australia from next year, followed by Victoria in 2021 and Queensland from 2030.

"If we do nothing, we're going to see shortfalls in gas, we're going to see shortfalls in electricity," the operator's chief operating officer Mike Cleary told the ABC ahead of the official release of the report on Thursday.

Mr Clearly said the report proves gas and power were now inextricably linked.

Modelling showed supply shortfalls of between 80 gigawatt hours and 363 gigawatt hours could be expected from summer 2018/19 until 2020/21, if there was no new development to support more gas-powered electricity generation.

Federal Environment and Energy Minister Josh Frydenberg said AEMO's projected gas supply shortfall had the potential to hurt both residential and industrial customers.

"This report is another reminder why the states and territories, who are locking up gas with moratoria, bans and regulatory restrictions, need to urgently rethink their position," he told The Australian.

"More gas supply and more gas suppliers will only enhance the security and affordability of our energy system."