Two new reports released by the Rocky Mountain Institute (RMI) conclude that “the role of natural gas as a ‘bridge fuel’ is behind us.” In announcing the reports, RMI states:
The past decade has seen a dramatic reduction in the costs of wind, solar, and storage technologies. At the same time, sophisticated utilities and market operators are increasingly able to procure grid reliability services from these non-traditional resources. As a result, leading US utilities are now prioritizing investment in “clean energy portfolios” (CEPs)—combinations of renewables, storage, and demand-side management strategies—that can cost-effectively provide the same reliability services as traditional gas-fired power plants.
RMI analyzed the economics of every proposed gas-fired power plant in the United States and found:
- Over 90% of proposed gas-fired capacity would be more expensive than an equivalent CEP.
- If built, owners of these gas assets will face tens of billions of dollars of stranded costs with uncertain future revenues as clean energy continues to fall in price.
- US electricity customers could save US$29 billion (NPV) by investing in CEPs instead of these uneconomic gas plants.
- This reprioritization of capital would also avoid 100 million tons of CO2 emissions each year, equivalent to 5% of the current emissions of the US electricity system.
RMI also projects that pipelines expected to ship gas to power plants will be underutilized:
Growth in US economy-wide demand for natural gas has been driven almost exclusively by the power sector over the past 20 years. In turn, this demand growth has helped drive $115 billion in gas pipeline investment over the same period, and interstate gas pipeline developers have proposed another $30 billion in new investment through 2025 in part to meet the expected increase in demand. RMI’s analysis, however, shows that growth in power sector gas use will stop in the near future, with dramatic implications for pipelines that rely on revenue from new gas plants:
- In the Eastern United States, throughput on new gas pipelines will fall 20%–60% below presumed levels by 2035.
- This decline in utilization will lead to rising unit costs for delivered gas borne, in most cases, by captive utility customers.
To download the two RMI reports – The Growing Market for Clean Energy Portfolios and Prospects for Gas Pipelines in the Era of Clean Energy – click here.
Another new report – released September 11 by the World Economic Forum’s Global Future Council on Energy – concludes that the era of carbon-intensive energy derived from the burning of fossil fuels is coming to an end, and a cleaner, more reliable energy future based on renewables like wind and solar will be the new normal. The Speed of the Energy Transition offers compelling evidence that stakeholders in the global energy system must prepare for change urgently, because it is coming fast.