The feasibility of cost-effective gas through network interconnectivity: Possibility or pipe dream?

Abstract

Australia's east coast gas market has faced transformational shifts in demand with the commencement of three Liquefied Natural Gas facilities in Queensland. Faced with risks of high domestic prices and potential gas shortages, political intervention has been considered as a possible solution. This paper investigates the impact of network interconnectivity on domestic gas prices by employing a long-term planning model underpinned by mathematical optimisation. At optimal system cost, improved network interconnectivity can provide material and sustained price reductions for the gas market with potential flow-on reductions to the electricity market. Increased connectivity is shown to deliver red..