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Get Over It: Natural Gas Is the Future

Sheldon SilverTom Shepstone
Shepstone Management Company, Inc.

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Fractivists imagine there is a way to stop natural gas and secure a renewables future with scare tactics but gas is the future and even renewables demand it.

It’s easy to get caught up in fractivist story lines about the future, which they imagine is a renewables one – a fossil fuel free zone. But, then the facts present themselves and there is a return to reality. Such is the case with today’s Today In Energy piece at the Energy Information Administration (EIA) website, which indicates the amount of electricity generated via natural gas is steadily increasing and renewables are growing with it.

No EIA is complete without a self-explanatory chart and here’s today’s:

natural gas electricity generation

The EIA’s research indicates the following (emphasis added):

The natural gas share of total generation also grows, from 27% in 2013 to 31% in 2040 in the Reference case, while the coal share declines from 39% in 2013 to 34% in 2040, and the nuclear share drops from 19% to 16% over the projection period.

Natural gas-fired generation is highly dependent on natural gas prices as a result of competition with existing coal plants and renewables. The AEO2015 includes several cases with varying fuel prices and economic growth assumptions. In the High Oil and Gas Resource case—where greater oil and natural gas resources lead to delivered natural gas prices to the electric power sector being 44% below the Reference case in 2040—natural gas becomes the leading source of generation by 2020 and accounts for 42% of total generation by 2040.

Natural gas, in other words, is expected to be used to generate 31% of our electricity in 2040 and it could go as high as 42%. It is, in the reference case, expected to increase by 341 billion kilowatt hours, in fact, a 28% gain. Meanwhile, renewables are expected to grow by 408 billion kilowatt hours and both coal and nuclear generation are also expected  to grow, You wouldn’t know that from many news reports, of course, which presume the death of all fossil fuels, but the truth is that electricity generated by fossil fuels will grow even more (by 524 billion kilowatt hours) than that generated by renewables (which largely consists of heavily subsidized wind energy and hydro-electric).

That brings us to the key point (emphasis added):

Growth in new renewable generation is also sensitive to natural gas prices. Lower natural gas prices in the High Oil and Gas Resource case result in fewer renewable capacity additions toward the end of the projection period and lower generation compared with the Reference case. Higher macroeconomic growth results in an increase in both natural gas and renewables generation, as higher electricity demand requires more generation from marginal sources, while lower macroeconomic growth has the opposite effect.

More economic growth yields more demand for both natural gas and renewables but especially in the case of natural gas. And, guess what produces more economic growth? You guessed it; low energy prices. Natural gas is here to stay and renewables will grow with it, contrary to every fractivist talking point.

Ain’t it grand?

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