Building a Clean and Reliable Energy Future: Natural Gas and Renewable Energy

For the past 35 years, the U.S. energy supply condition can be described as “precarious”, at best. But, over the past 5 years the Energy Sector in the US has been undergoing unprecedented change, spurred by a number of factors including a revolution in new energy technologies, rapid shifts in consumer attitudes, and the discovery of new sources of domestic energy supply in the form of shale gas. Each one of these factors by themselves has the potential to be “game changers”. But importantly, when considered collectively, these factors constitute a future for US energy supply that is cleaner, more secure and within our grasp.

This energy future holds real promise for material economic growth for the United States. Economies with secure energy supplies encourage capital investment which in turn creates both manufacturing and service jobs, jobs that have been bleeding away from our economy for years. And, slowing the outflow of capital to pay for imported energy eliminates a major drag on our economic performance, not to mention the national security concerns that are attendant to dependence on foreign sources of energy.

While this future is in our grasp, it is incumbent on us that we not allow it to slip through our fingers because we failed to act or because we permitted disproportionate action by any one group of stakeholders. We need a balanced solution that considers stakeholder views on environmental, economic, public health and safety and national security viewpoints. And then, we need to move forward. If we do so, the benefits we stand to accrue will secure the future for generations of Americans to come.

At Pace Global (an energy consulting and management company) we believe the optimal approach for building a clean and reliable energy future is based on marrying the expanded use of natural gas with renewable energy. The interdependence of these energy resources creates a synergistic effect. Power generation from natural gas uniquely complements the different forms of renewable energy in a way that improves the reliability and performance of our energy infrastructure. The new abundance of clean, reliable and economic natural gas provides an essential element of a clean energy future for decades to come.

Natural Gas and Renewable Energy – Complementary Power Supply Options

The alignment of natural gas and renewable energy is the most effective way to service the demand for clean power in the future. Natural gas and renewables are complementary; indeed, the growth of each is supported by the other as they play different and important roles in powering our homes and workplaces.

From a cost perspective, utility scale renewable energy and natural gas power plants collectively are the best option to replace or supplement traditional power generation. They have different, but complementary cost profiles, that are proven, efficient and reasonably priced.

Renewable power, namely wind, geothermal and large solar are characterized by high upfront capital costs with very low operational costs. Wind is now generally second only to natural gas technologies in affordable installed costs, which is well below other sources of clean power generation. Natural gas power plants have comparatively low upfront capital costs with higher operational costs. Historically, gas-fired power plants had higher variable costs, but with today’s abundant supply of natural gas, price levels are low.

As more renewable energy is increasingly deployed into our power markets, the intermittency of the sun and wind become more of a challenge, causing significant portions of the operating power plants on the system to have varying output. Fortunately, power system operators and participants can now hold high confidence that the intermittency of renewable power generation can be mitigated as it relates to grid reliability, due to the current and future presence of natural gas power generation. Unlike almost any other type of large-scale clean power generation, natural gas-fired power plants are able to go from a standstill to generating significant amounts of power in only a few minutes. This is due to the advanced gas turbine technology in place today that can “spin up to speed” quickly. While other technologies, such as energy storage, have been proposed as an alternative solution to backstopping the intermittency of renewable power generation, none of the alternatives are proven and cost-competitive when compared to natural gas power generation. Therefore, to scale up renewable energy generation to its potential across the nation, more national gas-fired generation will be in demand, especially as traditional coal-fired power plants are retired in response to new Environmental Protection Agency (EPA) regulations.

Most importantly when it comes to capital deployment, reliance on natural gas and renewable energy generation will be characterized by investment in assets in this country and not by an outflow of dollars overseas. Natural gas and renewable energy are domestic energy resources in abundant supply throughout the U.S. They are a secure domestic supply of energy. Their development has driven, and will continue to drive, significant job and economic growth here in the U.S. Reliance on these fuels will improve America’s trade imbalance and allow us to create more goods and services and put the “Made in America” stamp back in global prominence.

Natural Gas and Renewable Energy – A Balanced Portfolio
Today with the advent of massive new shale gas discoveries, the United States possesses more natural gas reserves than any other country in the world. Shale gas is now expected to enable the U.S., the world’s largest consumer of natural gas, to be self-sufficient for decades with natural gas reserves estimated to be well over 80 years.

It is always prudent to have a balanced portfolio of power generation plants. By deploying more renewable energy generation in lockstep with increasing natural gas generation, a more balanced portfolio is achieved. For both natural gas and renewable energy to fulfill their potential they need to grow together. Only through the understanding of the interdependence of these industries will we begin to realize the vision for aligned growth of these domestic energy resources and how America’s Clean Energy Future can be achieved in our power sector.