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Page added on August 24, 2014

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Sorry, Solar and Wind, but Natural Gas Wins

Sorry, Solar and Wind, but Natural Gas Wins thumbnail

Fracking is expected to fuel an astounding 56% surge in U.S. natural gas production from 2012 to 2040 according to projections from the U.S. Energy Information Agency, or EIA. Because of that, surging production utilities are expected to build 1,600 million megawatt hours of new natural gas-fired electric power generation by 2040. That’s an incredible amount of new natural gas power generation, and well above the expected additions of renewable power generation from wind and solar.

A closer look at why natural gas wins
The EIA prepared three graphics that detail the projected rise of natural gas power generation in key power regions over the next few decades. The following chart takes a look at the Eastern region of the country.

Source: EIA

As that chart points out, natural gas power generation in the East has already doubled since 2005 as it has directly taken market share from coal. Looking ahead, the combined power regions in the East are expected to add 212 million megawatt hours of new natural gas power generation from 2012 to 2040, which is by far the most in the country. This is because natural gas is expected to be the fuel of choice to support the growth in power demand in this population-heavy region.

This is happening even as coal and nuclear power supply are expected to remain roughly static so that natural gas eventually passes nuclear as the second largest power supplier in the East. Natural gas also easily beats the expected growth in renewable power generation, which will add less than 100 million megawatt hours and remain a distant fourth to nuclear power.

Next, we see in the Texas region that natural gas is really expected to be the dominant power source in the years ahead as noted in the following chart.

Source: EIA

The EIA projects that natural gas will extend its lead in Texas as the dominant power source as it sees natural gas power generation surging by 81 million megawatt hours from 2012 to 2040, which is the fourth largest increase in the U.S. Like the East, this surge is due to the growth in power demand, which will almost be completely satisfied by new natural gas power generation. Meanwhile, the EIA is forecasting little to no growth in power generation from coal, nuclear, or renewables over the next few decades in Texas.

Finally, out in the West the EIA actually does see a brighter future from renewables as noted in the following chart.

Source: EIA

However, while renewable power will remain the leading generator of electricity in the West, natural gas growth will more than keep pace. In fact, the 105 million megawatt hours of growth that that EIA is projecting from 2012 to 2040 is the second-largest increase in the U.S. One of the reasons for this is that California in particular needs natural gas generation to complement its renewable generation for load-balancing purposes, which shows just how important natural gas is even in supporting the growth of renewables. Because of this, natural gas power generation will nearly rise lock-step with renewables to meet rising power demands.

Final thoughts
Across the country natural gas is projected to be the fuel of choice to meet America’s growing electric demand. While renewable generation will grow in much of the country, it won’t grow anywhere near fast enough to meet demand growth. Further, even where renewables are growing, natural gas is needed to supplement that demand. So, sorry wind and solar, but natural gas is what will really be powering America in the years ahead.

Fool.com



16 Comments on "Sorry, Solar and Wind, but Natural Gas Wins"

  1. rockman on Sun, 24th Aug 2014 5:08 pm 

    NG may win at $4/mcf. But how would it do at $10/mcf? And will it still win at $4/mcf when demand during the winter can’t be met by the pipeline system?

    Everything works…until it doesn’t.

  2. energyskeptic on Sun, 24th Aug 2014 5:18 pm 

    A huge amount of expected fracked NG — half?– was supposed to come from California, but it’s well known and published in mainstream media that 96% of the Monterey shale can’t be exploited. How come that didn’t put a dent in the optimism?

  3. Speculawyer on Sun, 24th Aug 2014 5:18 pm 

    Meh. It wins for now. But residential homes (generally) can’t drill their own NG wells but they can easily install residential solar PV. Plus RPS programs require more renewables so solar will also move forward at a utility scale level too.

    But those NG prices won’t remain low forever . . . the drillers will go bankrupt.

    I just hope that the utilities are wise enough to be installing ‘peaker’ NG plants that can ramp up and shut down quickly because that is what we are going to need as we keep adding more and more solar PV, wind, CSP, etc.

  4. Graeme on Sun, 24th Aug 2014 8:17 pm 

    The conclusions in this Fool report indicate a more likely scenario:

    http://www.nasdaq.com/article/how-much-longer-can-low-us-natural-gas-prices-last-cm383424

  5. Plantagenet on Sun, 24th Aug 2014 8:38 pm 

    Slowly but surely the use of NG is growing in electrical generation, home heating, and transportation. And while oil production is peaking, we can count on NG for another century according to President Obama.

  6. ghung on Sun, 24th Aug 2014 8:41 pm 

    Gridweenies…

  7. Nony on Sun, 24th Aug 2014 8:57 pm 

    You’re going to be waiting a generation for that $10/mcf, Rock. Look at how the Marcellus has risen. Look at the future’s market. Look at the estimates by all the analysts. Look at all the Marcellus capacity that is just waiting for infrastructure. Look at the Utica. There is a metric butt ton (an official Nony unit) of NG as sub $5.

  8. MKohnen on Sun, 24th Aug 2014 11:16 pm 

    Nony,

    If it’s metric, it’s a “tonne.”

  9. dmtk on Sun, 24th Aug 2014 11:31 pm 

    Economics 101

    If someone says:

    “We’ll have cheap gas for the next 30 years”

    He/she is basically saying:

    “It does not matter how much the demand will increase we will be able to increase the supply even faster”

    And we all know that this is absurd.

  10. Jerry L on Mon, 25th Aug 2014 3:02 am 

    How accurate were EIA projections in the past?

  11. Dredd on Mon, 25th Aug 2014 7:37 am 

    Oil wins hands down in the war on civilization.

  12. OneHundredByFifty on Mon, 25th Aug 2014 7:57 am 

    The EIA has historically been terrible at predicting renewable energy growth. They have consistently underestimated it. This is a case in point. They show renewables in TX flatlined. How can that be, ERCOT just built vast new T&D resources so that they can continue to build out wind power on their grid. They have, under contract, roughly 60% increase. And while many bemoan the fact that wind is intermittent, it is, in fact, a remarkably reliable night time resource in some of the windiest areas. http://handlemanpost.wordpress.com/2014/08/04/evs-are-great-match-to-wind-in-many-areas/ This makes it a great fit for electric vehicles. And while natural gas will undoubtedly be with us for some time to come, I would have to say, Sorry natural gas, wind and solar just keep getting cheaper and unlike you they are not subject to the fickleness of supply and demand. Their price is governed by the relentlessly downward experience curve. http://handlemanpost.wordpress.com/2013/12/06/up-to-date-cost-curves-for-batteries-solar-and-wind/

  13. rockman on Mon, 25th Aug 2014 8:58 am 

    dmtk – And that’s the nasty feedback loop. The future price of NG will be more dependent on demand (and thus economic health) then how much we are producing. All one has to do is review the extreme price volatility over the last 25 years to prove that reality. Increasing demand leads to higher prices. Higher prices ultimately reduces demand to some degree.

    But as Spec points out we had record NG production last winter yet there were periods of shortages of NG and propane due to delivery limitations. Solar might not be a great bargain for many today. But sitting in a house at 25 degrees for several days might provide a bit of non-financial incentive.

    And as far as wind power goes I’ll keep tossing out the Texas example. In S Texas we have some of the lowest wellhead NG prices in the country. S Texas is also a major supplier of wind power. Wind power that supplied a record 30% of total state demand for a period last March. At that time wind beat both cheap NG and even cheaper lignite.

  14. Kenz300 on Mon, 25th Aug 2014 9:37 am 

    Renewables are growing in market share every year.

    The price for wind and solar continues to fall.

    ———————

    Renewables Provide 56 Percent of New US Electrical Generating Capacity in First Half of 2014

    http://www.renewableenergyworld.com/rea/news/article/2014/07/renewables-provide-56-percent-of-new-us-electrical-generating-capacity-in-first-half-of-2014

    —————–

    Global Renewable Energy Status Uncovered

    http://www.renewableenergyworld.com/rea/news/article/2014/08/global-renewable-energy-status-uncovered?page=all

  15. Speculawyer on Mon, 25th Aug 2014 1:22 pm 

    That SouthEast region needs to get with the program. They need some RPS programs. They need to accept net metering. They need to have some incentive programs. They need to stop electing theocratic politicians that deny science. Why not create lots of jobs installing solar & wind like the West, mid-west, and NorthEast have done?

  16. TonyPrep on Wed, 27th Aug 2014 2:39 am 

    Interesting take on solar, perhaps injecting some reality?

    https://www.youtube.com/watch?v=JJ9-jYfpwfw

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