Nat gas, renewables set to squeeze coal, oil
By Talia Buford, Politico Pro
Published: January 31, 2013
Changes in the U.S. energy supply and the growing appetite for clean sources will create an opening to expand the partnership between natural gas and renewables, according to a group of energy analysts and green energy promoters.
The Sustainable Energy in America 2013 Factbook, from research firm Bloomberg New Energy Finance and the Business Council for Sustainable Energy, found that natural gas and renewables posted large gains in their share of total U.S. energy consumption at the same time as coal and oil saw their usage drop.
Natural gas provided 27.2 percent of America’s total energy supply in 2012 — the same year renewables, including solar, wind, hydropower and biomass, contributed 9.4 percent of U.S. energy, the report found. During that same period, coal dropped 4 percentage points to account for 18.1 percent of total energy supply, and oil dropped roughly 3 points to 36.7 percent.
Meanwhile, energy efficiency measures helped reduce energy consumption in America by 6.4 percent between 2007 and 2012, the report found.
“These industries, although we do compete, are working together to address our most pressing energy needs in this country,” said Rhone Resch, president of the Solar Energy Industries Association. “It’s not just new generation, it’s smarter generation. And it’s not just more of something new, it’s actually doing it in a way that’s never been done before.”
Part of the reason energy trends are changing is because it’s getting cheaper to use lower carbon energy sources like natural gas, and no-carbon renewable alternatives. The price for solar-power generated energy fell 17 cents to 14 cents per kilowatt-hour between 2009 and 2012, while the cost of power from wind farms fell one cent over the same period.
“The growth of renewables is the story of the future,” said Dave McCurdy, president of the American Gas Association. “We have the opportunity for new technological advances working with natural gas and other sources to not only improve efficiency but also the potential to reduce carbon even further.”
Make no mistake: Natural gas and renewables are still competitors, especially as cheap natural gas often makes it uneconomical to build wind projects. But there’s an opportunity for both of them to get a share of the market going forward, said Ethan Zindler, head of policy analysis for Bloomberg New Energy Finance.
“Inevitably, there certainly are cases where wind and natural gas have gone head to head and it’s been challenging for wind developers,” he said. “In a number of cases, the production tax credit puts wind in the game and makes it more competitive. And without it, it can be much more difficult for sure.”
That credit, which got a last-minute one-year extension at the end of 2012, caused a rush on projects as developers hurried to complete their projects before the credit expired. There are few wind projects currently under construction, and Zindler said it may be a few years before production ramps back up to 2012 levels.
Natural gas can be a bridge fuel to renewables, Resch said, especially since natural gas-fired power plants can help stabilize intermittent power output from wind projects.
Wind farms typically produce about one-third of their rated output capacity, and power production can rise and fall quickly with wind speed. That makes them a natural partner for new, highly efficient natural gas power plants that can respond far more quickly than coal-fired or nuclear power plants to shifts on the grid.
“I think it’s a bridge, but I think it’s a long bridge,” he said, projecting that natural gas and renewables could make up the entirety of American power generation in 30 years.
Currently, the total installed capacity for natural gas and renewables (excluding hydropower) is 629 gigawatts, or 58 percent of the total power generating mix. In 2007, it accounted for 548 GW, or 54 percent of the total power generating mix. The biggest gains have been seen in renewables capacity, which doubled between 2008 and 2012.
“What you will see is an increased growth of renewables as a percentage of our energy mix,” Resch said. “That’s when we’ll start to get to an all-of-the-above strategy. We don’t have that now.”