As environmental concerns drive power companies away from using coal, natural gas has emerged as the nation\u2019s No. 1 power source. Plentiful and relatively inexpensive as a result of the nation\u2019s fracking boom, it has been portrayed as a bridge to an era in which alternative energy would take primacy.<\/p>\n
But technology and economics have carved a different, shorter pathway that has bypassed the broad need for some fossil-fuel plants. And that has put proponents of natural gas on the defensive.<\/p>\n
Some utility companies have scrapped plans for new natural-gas plants in favor of wind and solar sources that have become cheaper and easier to install. Existing gas plants are being shut because their economics are no longer attractive. And regulators are increasingly challenging the plans of companies determined to move forward with new natural-gas plants.<\/p>\n
\u201cIt\u2019s a very different world that we\u2019re arriving at very quickly,\u201d said Robert McCullough, an energy consultant in Portland, Ore. \u201cThat wind farm can literally be put on a train and brought online within a year. It is moving so fast that even critics of the old path like myself have been taken by surprise.\u201d<\/p>\n
The shifting dynamics are being seen in the Western states in particular \u2014 driven not only by economics, but by regulation and climate as well.<\/p>\n
The Arizona Corporation Commission, which regulates the state\u2019s investor-owned utilities, recently refused to endorse plans by three power companies that included more natural-gas facilities. Commissioners directed them to make greater use of energy storage and plants that produce zero emissions.<\/p>\n
\u201cIt\u2019s very erratic what we\u2019re now doing with power,\u201d said Andrew M. Tobin, an Arizona commissioner who led efforts to block new gas plants. \u201cI am so nervous that we will end up building a lot of capital plant that doesn\u2019t stand the test of time.\u201d<\/p>\n
Some feel the push to get beyond natural gas may be too much, too soon. Officials at Arizona Public Service, the largest utility in the state, said they needed to include new natural-gas development as part of an overall mix, partly because of the state\u2019s round-the-clock air-conditioning demands.<\/p>\n
\u201cOur needs are different than other utilities,\u201d said Greg Bernosky, the utility\u2019s director of state regulation and compliance. \u201cWe need resources that can have a long duration when our load is high, well after the sun has set. Natural gas resources provide that flexibility.\u201d<\/p>\n
Nationwide, other utility executives, power producers and federal regulators have also argued that a healthy power grid requires consistent power, even when the sun doesn\u2019t shine or the wind ceases to blow. The more solar and wind power that is added to the electric grid, they say, the greater the need for reliable backup sources like natural gas.<\/p>\n
\u201cGas has got to be part of that equation,\u201d Robert F. Powelson, a commissioner on the Federal Energy Regulatory Commission, recently told an energy conference. \u201cThe gas system has gotten extremely reliable.\u201d<\/p>\n
And he argued that even recent advances in storage did not justify an overreliance on alternative energy, however inexpensive. \u201cStorage is great,\u201d said Mr. Powelson, a nominee of President Trump and a former chairman of the Pennsylvania Public Utility Commission. \u201cBut that is not a reliable long-term solution to the energy markets.\u201d<\/p>\n
Natural gas isn\u2019t likely to be unseated as the country\u2019s primary source of electricity generation anytime soon. In fact, utility companies plan to add more natural-gas plants than any other source, including all alternative energy sources, like solar, wind and hydropower, combined.<\/p>\n
But the calculus is rapidly shifting as the prices of wind and solar power continue to fall. According to the Department of Energy, power generated by natural gas declined 7.7 percent in 2017.<\/p>\n
And the latest report by Lazard, the financial advisory and management firm, found that the cost of power from utility-scale solar farms was now on a par with natural-gas generation \u2014 and that wind farms were less expensive still.<\/p>\n
Lazard calculated the unsubsidized cost of wind power at 3 cents a kilowatt-hour, while natural gas and solar energy were a little more than 4 cents. The typical American household pays 12.5 cents a kilowatt-hour for electricity, according to the United States Energy Information Administration. (The cost beyond generation reflects transmission, taxes, and other utility expenses and profits.)<\/p>\n
Moreover, the market equation in the West is driven largely by California, the sixth-largest economy in the world, which has mandated that 50 percent of its power be generated from renewable sources by 2030. With a regional energy market run by the state\u2019s electricity grid overseer, the California Independent System Operator, fossil-fuel plants have had increasing difficulty selling their power into a market with low-cost solar and wind power.<\/p>\n
At the same time, state legislatures and regulators are increasingly demanding that utilities rethink how they manage their systems to reduce carbon emissions.<\/p>\n
Some power producers have bristled at the mandates, even scaling back their operations in certain markets because, they said, it became too difficult to compete without losing money.<\/p>\n
NRG Energy, for example, announced this month that it would close three natural-gas plants in California because of the regulatory push for clean energy.<\/p>\n
After NRG\u2019s announcement, Calpine, a power company based in Houston, said it would suspend plans to build a natural-gas plant in California.<\/p>\n
\u201cWe cannot invest a single dollar in California,\u201d Thad Hill, Calpine\u2019s chief executive, said. \u201cI would not call California a true competitive market.\u201d<\/p>\n
But a big Oregon utility, Portland General Electric, has embraced clean-energy mandates to ease it off dependence on fossil fuels.<\/p>\n
\u201cFirst off for us, climate change is real and we have to diversify our mix,\u201d Dave Robertson, the company\u2019s vice president for public policy. \u201cWe\u2019re driving more and more toward a decarbonized future. We really feel like we\u2019ve got to own that. It\u2019s really where the science is taking us.\u201d<\/p>\n
This month, Portland General entered into an agreement to buy surplus hydropower from the Bonneville Power Administration \u2014 the surplus arises largely from California\u2019s turn to other renewable sources \u2014 helping the utility avoid construction of natural-gas plants to replace a coal facility.<\/p>\n
\u201cThere are surpluses of energy that are looking for markets,\u201d said Brett Sims, Portland General\u2019s director of strategic planning and resource strategy.<\/p>\n
Portland General\u2019s view offered a hopeful message to environmentalists, who pushed for the weaning off coal and now have done much the same with natural gas.<\/p>\n
\u201cIt feels like d\u00e9j\u00e0 vu all over again for the electric sector,\u201d Mike Brune, executive director of the Sierra Club, said. \u201cUtilities began to find that coal was not just a dirty form of energy but a more expensive form of energy, so they began to replace coal. Now, as they\u2019re looking to replace coal, they\u2019re finding gas in the same situation. There\u2019s a broad trend across the energy sector, mostly in the West, where coal and natural gas can\u2019t compete.\u201d<\/p>\n
Mr. McCullough, the Portland energy economist and principal at McCullough Research, said that the rapid change had caught many in the industry by surprise and that it could lead to a shorter future for natural gas.<\/p>\n
\u201cI think the fact of the matter is we\u2019re seeing a lot of people realizing that there are different ways to go,\u201d Mr. McCullough said.<\/p>\n","protected":false},"excerpt":{"rendered":"
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