Natural gas infrastructure critical for affordable electricity

July 1, 2020   By Jenna Careri

Natural gas infrastructure critical for affordable electricity

A new analysis by the Department of Energy’s National Energy Technology Laboratory concluded that securing reliable and affordable power generation over the coming years will require major investments in natural gas infrastructure and baseload generation facilities, such as coal and nuclear plants.

The findings have triggered a debate between clean energy advocates, who claim the expansion of solar and wind power can cope with energy demand, and supporters of the DoE’s findings. The NETL report notes that at least $1 billion in investments in natural gas pipelines will be necessary just to maintain current reliability levels.

“As the power sector relies more and more on natural gas and renewable sources for power generation, infrastructure must keep pace with this growth,” said NETL Director Brian Anderson. “The Department continues to advance grid storage technologies for future deployment, but we’ve seen how periodic winter weather events exert more pressure on the electricity system and associated natural gas infrastructure today.”

The study looked at the impact of extreme weather events on America’s energy grid, particularly the bomb cyclone event of 2018. The researchers concluded that a spike in energy demand, combined with infrastructure damage, produced increased gas prices. During peak times, the additional energy provided by coal and nuclear facilities proved crucial in maintaining a steady gas price and a dependable energy supply.

Report fuels new warnings over coal retirements

Ten gigawatts of coal power generation capacity were shuttered in 2019. For America’s Power, an advocacy group for coal generators, the DoE study provides weight to the warnings they’ve been making about the recent acceleration in coal plant shutdowns.

Energy prices could rise by 35 percent in some areas of the US if the trend of coal shutdowns continues, according to American Power. “The nation’s coal fleet is needed to ensure the reliability and resilience of the grid and to reduce energy costs,” the group said in a statement.

The Sierra Club, by contrast, was less than impressed by the DoE report. It sees the study as part of the Trump administration’s push to secure a future for coal that fails to acknowledge the changing landscape in the energy sector.

“This report simply doesn’t hold water and is out of step with the views of modern energy economists,” argued Mary Anne Hitt, senior director of Sierra Club’s Beyond Coal campaign. “Coal is the most expensive energy resource in the country.”

Risks for investment

Other researchers are less optimistic about the long-term viability of natural gas infrastructure. According to the Rocky Mountain Institute, which released a report in 2019, the economics for energy generation in America have reached an “historic tipping point.”

The combination of solar, wind, storage, energy efficiency, and demand response means that new technologies can carry the burden of increased energy demand more efficiently than coal and gas, the RMI maintains. This means that large portions of the estimated $90 billion currently invested in developing natural gas plants and $30 billion in building out pipelines could be outdated within two decades.

“By the mid-2030s, as clean energy prices continue to fall, building a new portfolio of clean energy resources will become less costly than continuing to pay the operating costs of a combined-cycle gas plant, and such a portfolio will provide the same level of energy, capacity and reliability services,” noted the report.

“These cost trends could lead to the economic retirement of plants representing over 90 percent of currently proposed new combined-cycle gas capacity by 2035, resulting in a significant risk of investment capital becoming stranded. Just as coal plants have retired due to competition from low-priced natural gas in the past 10 years, the ongoing cost declines in wind, solar and battery technologies threaten to do the same to natural gas plants by the mid-2030s.”

The US government doesn’t appear to be convinced, however. According to the Energy Information Administration’s Energy Outlook 2019, natural gas demand will still rise by 60 percent by 2050 even assuming a four-fold growth for solar power and more than a six-fold growth for wind. Such substantial growth certainly suggests that considerable investment and expansion in the country’s natural gas pipelines is going to be required to transfer much-needed energy supplies to market.

 

Jordan Smith is a freelance journalist and translator covering issues related to energy, the environment, and politics. His work has appeared on the independent news site Opposing Views, and at the Canadian Labour Institute.

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