gas is not an option. the only cosolidation will be coldry with...

gas is not an option. the only cosolidation will be coldry with federal funded retrofit for LYP.

"For example, using the green line, if gas prices increased from $4/GJ to world parity ($6 to 8/GJ) the carbon price would need to increase from $9/tCO2e to around $60/CO2e for CCGT to be competitive with USC black coal."

The carbon price required to deploy new base-load CCGT generation is directly influenced by the gas and coal fuel prices in Australia and ultimately world prices. For example, higher gas prices generally require a higher carbon price to achieve a given level of CCGT deployment. This could manifest as a policy risk if local abatement and actual shifts in electricity generation merit order are important to policy objectives. Only a longer term policy framework can address these commodity price dependency issues with a degree of certainty. Fixed carbon price approaches may be less effective because they will not adjust naturally to unexpected movements in commodity fuel prices.
Figure 2.2 below illustrates the sensitivity of the prices of carbon to the prices of gas and black coal (using industry estimates). Points along the green and blue lines indicate the carbon price necessary to equate the long run marginal costs between new entrant CCGT generation and Ultra Super Critical (USC) black coal generation technologies. The green line assumes a black coal price equivalent to $1/GJ and the blue line assumes a black coal price of $2/GJ. Taking these black coal prices as given, increasing the gas price requires progressively higher carbon prices to make CCGT competitive with USC black coal. For example, using the green line, if gas prices increased from $4/GJ to world parity ($6 to 8/GJ) the carbon price would need to increase from $9/tCO2e to around $60/CO2e for CCGT to be competitive with USC black coal.
Figure 2.2 – The sensitivity of carbon prices to gas and black coal prices

Gas prices
The price of gas is fundamental to determining the technology choice for new generation. As illustrated above, when considered independently, a high price of gas will increase the likelihood that new generation is either coal (as seen in Western Australia) or in wind turbines, while a low price of gas will increase the likelihood of investment in gas fired technology either OCGT or CCGT.
Figure 2.3 shows SKM MMA estimates of indicative gas contract prices for the Eastern states and for Western Australia. Gas prices in the eastern states have been relatively constant at around $3 to $3.50/GJ. However, gas prices in Western Australia seem to be rising from $5 to $6/GJ, with current market forecasts indicating that long-term prices will be above these levels. LNG has been in operation in Western Australia for many years and the gas price is much more aligned to world oil prices and substantially above the historic price of gas on the east coast. In this market there has been recent investment in new coal plant (Blue Waters power stations) and the refurbishment of a previously retired power station is currently underway (Verve Energy Muja AB). In addition, it should also be noted that other possible new coal power station projects have previously sought environmental approvals for their potential projects.
Figure 2.3: Indicative average new gas contracts prices

Source: SKM MMA, Department of Climate Change and Energy Efficiency, Projections of Greenhouse Gas emissions for the stationary energy sector, 27 January 2011, pg 24, http://www.climatechange.gov.au/publications/projections/~/media/publications/projections/skmmma-stationary-energy-modelling-pdf.pdf