How Long Will Natural Gas Be A Bridge Fuel?

In a previous article, I addressed the reality that natural gas is already serving a bridge fuel between a past powered by coal and a future powered by renewables.

Today, I want to discuss the factors that will influence the length of that bridge.

Coal is a source of firm power, which means power that is guaranteed to be available when needed. This contrasts to wind and solar power, which are intermittent. They are available when the sun shines and the wind blows.

That means that intermittent power sources require much more installed capacity than do firm power sources to produce the same amount of electricity over time. The capacity factor -- that is the amount of power produced divided by the power that would be produced if the power source was producing at full capacity at all times -- is around 90% for nuclear power, 70% for geothermal power, and 50-60% for coal-fired and natural gas-fired power. But annual power factors for wind and solar power are in the 25% to 35% range.

This has two implications. One is that wind and solar power must have around double the installed capacity of firm power sources like coal to produce the same amount of electricity over time. But because these intermittent sources can sometimes see output fall dramatically, they must also have significant backup power supplies available.

Opponents of using natural gas as a bridge to a renewable future argue that batteries can fulfill this backup role. They see the role of natural gas as simply filling a balancing role for renewables in times of extreme mismatches between supply and demand. It is probably true that this is the long-term solution, but cost-effective battery technology isn't quite ready to assume this role on a massive scale.

That's why natural gas has become a bridge. But how long might that bridge be? We can look back at trends since 2000 and extrapolate with a thought experiment.

The U.S. generated 2.0 trillion kilowatt-hours (kWh) of electricity from coal in 2000, 611 billion kWh from natural gas, and about 6 billion kWh from wind and solar power.

By 2017, power generated from coal had fallen 700 billion kWh to 1.2 trillion kWh. Natural gas generation increased since then by 700 billion kWh to 1.3 trillion kWh, while wind and solar power grew by 300 billion kWh. (Including hydropower and biomass, renewables contributed a total of to 687 billion kWh in 2017).

So, natural gas has more than doubled the contribution of wind and solar power to the power mix since 2017, but the growth rates for wind and solar have been far greater.

So, let's extrapolate. The BP Statistical Review shows that in the U.S., the output of wind and solar power over the past five years roughly doubled. Although growth rates have slowed in recent years, let's make a generous assumption and project that they continue to double every five years.

At that rate, it would take two more doublings of wind and solar output to equal the 2017 contribution of coal to the power mix. One more doubling beyond that would then also equal the 2017 contribution of natural gas to the power mix.

So I think that makes a strong case the even with aggressive assumptions, coal will remain an important part of the power mix for at least another decade. (Although I believe it will be in the power mix far longer than this). Natural gas will continue to be an important bridge fuel during that time, and in the best case won't be phased out for at least 15 years.

In reality, recent U.S. government policy decisions are likely to continue to slow the growth of wind and solar, even as they continue to become cheaper and cheaper. The speed of development of battery technology may also be a limiting factor. Thus, the U.S. is probably looking at natural gas as an important bridge fuel for at least two more decades. Globally, natural gas will probably continue to grow in importance through at least 2050.

In fact, that was the conclusion of a recent report by IHS Markit called Rivalry: The IHS Markit View of the Energy Future (2018-50) The report projected that global natural gas consumption will rise from 3.2 billion metric tons of oil equivalent (TOE) in 2017 to 5.2 billion metric TOE in 2050. This forecast represents the largest expansion of any source of energy through 2050.

I will discuss the report's projections for the global oil market in the next article.

Source: Forbes
Date: Sep 10, 2018