Natural gas has dominated for 10 years, but wind and solar will dominate the next 10
The Business Council For Sustainable Energy has just issued the 2020 edition of its annual Sustainable Energy In America Factbook series, and the first thing to jump out is the inclusion of natural gas under the category of “sustainable.” That’s quite a stretch, to say the least. Nevertheless, the report provides ample room for natural gas in the clean energy revolution of the past 10 years. For the next 10 years ahead, though, the 2020 Factbook exposes a number of factors that should send shivers up the spines of natural gas stakeholders.
Natural Gas & Power Generation
Before we jump in, let’s observe that the Business Council for Sustainable Energy is not to be confused with the American Sustainable Business Council. The latter does not include natural gas stakeholders among its members, and the former does.
That partly explains why the 2020 Factbook puts natural gas in the same “sustainable” category as wind or solar. The Factbook also aims at demonstrating that the US energy landscape can change dramatically in just 10 years without throwing the economy into recession, and gas has played a role in that story, sustainable or not (spoiler alert: not).
The Factbook also places an emphasis on power plant emissions, noting that the US has achieved economic growth every year for the past 10 years, “while cutting both power-sector CO2 emissions and consumer energy costs to their lowest levels in a generation.”
The Factbook cites a familiar list of elements leading to reduced emissions from power plants, with two interwoven factors being the familiar ones: natural gas chased coal out of the power sector as a torrent of low cost gas flooded into the energy market.
Red Flags For Natural Gas
While the Factbook lingers lovingly on that picture, it also takes note of other important elements that are beginning to knock the pins out from under natural gas.
The Factbook cites several factors that were practically nonexistent 10 years ago but have gone practically mainstream in the more recent past. One major example is the rise of utility-scale renewable energy development, along with new financing tools that have enabled corporate energy buyers to accelerate wind and solar development.
Renewables like wind and solar are now winning contracts based on economic merits alone, and that renewables are now the “cheapest new generation source in many U.S. power markets,” as the Factbook notes.
Of particular concern to natural gas stakeholders is the role of state policy in renewable energy development. In a trend partly attributed to the results of the 2018 mid-term elections, the Factbook notes that 9 states increased their existing renewable portfolio standards in 2019.
On top of all this activity, in the near future the US is looking at rapid growth and falling costs in the offshore wind sector, where activity is finally ramping up after years of delay.
More Red Flags For Natural Gas
The rise of renewable wind and solar over the past 10 years is just a harbinger of things to come in terms of pushing natural gas out of the US energy picture.
For example, the Factbook argues that technology improvements are not the main reason why renewable energy costs have continued to drop in recent years. Economies of scale in manufacturing have played the key role, and there is plenty of room for additional opportunities from that angle (as a side note, the US Department of Energy has also been working with solar industry stakeholders and local jurisdictions to cut permitting and other “soft costs” for solar projects).
Energy storage is another factor pushing down demand for new natural gas power plants, as the Factbook elaborates:
“In particular, “PV+storage” projects have under-bid natural gas-fired plants to win power-delivery contracts in certain states thanks to a 77% drop in the price of typical PV module and an 87% decline in battery pack prices.”
The Factbook also places a strong emphasis on energy efficiency. Despite rollback efforts by the Trump administration, the mainstream energy market is supporting more energy efficiency tools than ever before. The report cites smart meters and automation as well as energy efficient appliances and, yes, light bulbs.
Aside from noting areas where energy efficiency has achieved deep penetration, the report indicates that there is ample room for additional progress. For example, as of 2019 LED lighting penetration in the US was stuck at the 50% mark, and only 13% of building floor space fell under efficiency disclosure requirements.
Look Out, Here Comes The 100% Electric Home Of The Future
All of this should be concerning to natural gas stakeholders, as it impacts both electricity consumption from power plants and demand for natural gas used in heating, cooking and other appliances.
As one indication of the impact of energy efficiency, the report notes that the number of residential gas customers grew 8% over the past decade, but residential consumption only rose 5%.
Slowing growth is not the same as stopping it, let alone reversing it. However, there are strong indications that gas stakeholders cannot necessarily count on continued growth from domestic customers,.
Momentum is gathering for a movement to free buildings from natural gas. Much of the activity so far has focused on incentivizing the conversion of formerly gas-supplied buildings to 100% electricity. A handful of jurisdictions have also imposed bans on gas hookups for new buildings.
CleanTechnica is checking in with BCSE for more on that, so stay tuned.
In any case, if the Factbook at first appears to be a love letter to natural gas, read between the lines. Gas is has played a dominant role in the US energy transition over the past 10 years but there could be — and most likely will be — just as big a difference between now and 2030, as there was between 2010 and now.
Readers please note: the 2020 Factobook is a project of BCSE and BloombergNEF.
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(Originally appeared at our sister-site, Cleantechnica.)