Natural gas was first hailed as the bridge between the fossil fuel past and the renewable future. Then it came under fire because although cleaner than oil and coal, it is not entirely emission-free. But according to a new report from Energy Market Advisors, it will rule the energy mix of the United States even 20 years from now.
The reasons for this continued dominance are simple enough even if they may be unpleasant for the most hard-line supporters of renewables such as solar and wind. Gas is not only cheap, but its supply is also continuous, so, importantly, it does not need battery storage the way solar and wind do, which increases the total costs of such installations even if other costs are falling, which they are.
These falling costs will undoubtedly pave the way to much more solar- and wind-heavy energy mix across North America, while coal sinks into oblivion, partly driven by its worse economics, the report said. By 2044, close to half of the existing coal power generation capacity will be gone. At the same time, solar will grow from 60 GW this year to some 250 GW in 2044 – an impressive fourfold growth. Wind will grow, too, albeit more modestly, from 115 GW today to 191 GW in 2044. But gas will rule them all.
To date, natural gas accounts for some 41 percent of North American energy generation. In 2044, according to Energy Market Advisors, a division of Hitachi ABB, gas will account for 43 percent. This, compared with the explosive growth seen in solar and wind, does not seem particularly impressive. The thing to remember is, however, that even with this almost absent growth, gas will be the fuel driving the biggest portion of power generation in North America. And this means that the fossil fuel era is far from over, really.
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In some parts of the United States, it will even continue to be the dominant energy source even in 2044, according to the EMA report. In the Midwest, for instance, natural gas will account for 49 percent of energy generation in that year, while renewables will account for 31 percent. In the Southeast, gas will come to account for 57 percent, while renewables rise from less than 10 percent to 20 percent.
The forecast dominance of gas is not something that some governors such as New York’s Andrew Cuomo would want to hear as they strive for 100-percent renewable energy. But there is another reason gas will be dominant: it will help make the grid resilient to the intermittency of renewable energy generated by solar and wind farms. Because it is not intermittent like them, gas can provide the essential baseload every grid needs to provide a reliable power supply to its users. And if the supply is not reliable, the green energy boom could easily lose public support.
“We need to pay attention to the integrity of the electrical grid. Because if we do not, we are going to lose this whole green thing we’re doing. We’re going to lose the public,” a Long Beach state Assemblyman, Patrick O’Donnell, told the California water board this summer when a heatwave revealed the state’s weak spots in energy supply.
“Cheap natural gas prices and the energy source’s ability to fill in where sustainable energy falls short will speed investment growth,” the EMA report authors wrote. “As an energy source, gas is regarded as a ‘stop-gap’ solution for renewables.”
It may even become something more than a stop-gap solution if the projected strong growth in renewable capacity additions does not pan out. The expiry of the production tax credit and the phase-out of the investment tax credit could drive a slowdown in new solar and wind capacity additions, Shilpa Kokate, Advisory Director for Easter U.S. for Hitachi ABB Power Grids, told Oilprice.
There is also the issue of a carbon tax that will greatly help the shift to renewables from fossil fuels as will overall regulatory support for this shift, which has been essential for the advent of renewables everywhere. But there is also another thing, according to Kokate—failure to appreciate the role of natural gas in helping maintain the reliability of power supply.
Opposition to fossil fuels is understandable. It could become problematic, however, if it is so complete that it overlooks the role natural gas, if not other fossil fuels, plays in energy security. Renewable energy is clean, certainly, but as the sun does not shine around the clock, and the wind does not blow constantly and at a constant speed, they need storage to provide a reliable power supply. Building enough energy storage to eliminate the need for natural gas completely is a challenging task: battery installations take up a lot of space, and they don’t cost a dollar a kW. Until these challenges are overcome, gas will continue to be needed.
By Irina Slav for Oilprice.com
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Irina Slav
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
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