SA's electricity generation issues have been well documented over the past months as rapid increases in renewable power generation capacity - mostly from wind turbines - to more than 40% on average and as much as 80% on some days, has helped drive gas and coal-fired generators out of the state's market.

In fact, RISC says SA's generation has exceeded demand for periods of up to 10 hours, providing as much as 120% of demand during off peak periods.

As the renewables share increases, the profitability of traditional baseload generators drops, and they can be forced out of the market, creating further problems.

In new analysis that will hearten hydrocarbon producers, industry consultancy RISC says natural gas-powered generation is the one fossil fuel that Australia's state economies cannot afford to put out of business, at least until battery storage solutions for intermittent renewables arrive, and they are more than a decade away.

RISC's study into the WA domestic gas market demonstrates that the state has an abundance of natural gas available for power generation.

"It is widely accepted that once intermittent renewable energy sources such as wind and solar power exceed [roughly] 20-30% of a system's generation share, the resultant power management and reliability issues start to cause instabilities," RISC said.

The consultancy warned the erosion of traditional baseload generation appears to have already started in WA, with the share of electricity supplied by coal and gas dropping from 95% in 2006 to less than 90% last year.

Alarmingly, the share of gas as a fuel is dropping faster than coal.

Currently every new unit of renewable energy replaces one-third of a unit of coal and two-thirds of a unit of gas, which RISC believes is because gas is marginally more expensive than coal as a generation source.

RISC warned that this trend of replacing gas fired generation over coal has adverse implications both environmentally and economically.

"Gas fired generation is far more complementary to rising renewables than coal fired generation due to its greater responsiveness and faster start-up time," RISC said.

Greenhouse gas emissions are reduced by over 50% more when a unit of renewable energy replaces coal fired generation rather than gas fired generation.

In WA, coal-fired power stations produce roughly 1-1.5 tonnes of CO2 per megawatt hour, whereas gas-fired power stations produce about half a tonne of CO2 per MWh.

This means that in order to achieve the same amount of emissions reductions approximately twice as much investment in renewables is required if gas fired generation is turned off rather than coal fired.

Thus, RISC believes that the current trends will lead to a substantially greater increase in the future cost of electricity than is required for a given emissions reduction target.

Although WA does not have a renewable energy target there has still been significant growth in renewable power in WA due in part to both national and state subsidies.

Power generated in the South West Interconnected System by renewables has risen from less than 5% 10 years ago to more than 12% last year.

RISC's analysis shows that the rate of increase of renewable energy generation is speeding up and that by 2020 the SWIS will likely have over 20% of its electricity generated by renewable sources - mostly from wind turbines and solar photovoltaics.

Further problems

RISC says that to reduce the possibility of serious stability and reliability issues and maximise emissions reductions, the increase in renewables needs to go "hand in hand" with the promotion of gas-fired generation.

The firm warned that if the current trend continues then the increase in renewable generation in WA to 20% will only result in a 14% reduction in emissions from 2006 levels.

If gas generation is preferred over coal generation, then for the same level of renewables there would be a 21% reduction in emissions, RISC calculates.

If, in addition to the above, all current coal-fired power generation was replaced with gas fired generation - which RISC says is achievable with "little further investment" in gas-fired generation - the reduction in emissions would be 45%.

"Given that WA already has a large amount of gas-fired power generation it is in a unique position to adopt renewable energy and potentially avoid the reliability and stability issues that have been seen elsewhere," RISC said.

"In order to achieve this, however, the current trend of retiring gas fired power generation instead of coal fired power generation needs to be reversed."