Natural Gas and Renewables, A Partnership With Which Coal Can’t Compete
In an ugly weekend for Texas football fans, the Longhorns were defeated by the West Virginia Mountaineers. Sitting in the stadium, I reflected on our just-ended Presidential election in which energy issues – particularly the promise of a coal renaissance – played a major role. I was struck by the bigger battle between these two states currently unfolding off the gridiron. That competition is for the future of American electric power generation and, campaign rhetoric aside, it is one in which natural gas, wind, and solar from states like Texas and Oklahoma will resoundingly defeat the dirtier and increasingly more expensive coal from the mines of states like West Virginia.
Peaking in 2007 when it was used to generate half of the United States’ electric power, coal use has been declining steadily while the use of low-priced natural gas has been on the rise. By 2015, coal’s share had fallen dramatically, with each fuel then providing about one-third of our nation’s power generation. In coal country, this shift is often blamed on environmental policies, overregulation, and the growth of renewable energy. In reality, the causes are more complicated. While new regulations reducing harmful emissions from coal power plants have increased their cost of operations, the reduction in our use of coal is driven by economics, attributable primarily to the arrival of inexpensive and abundant natural gas.
Fuel switching by power generators is becoming common, with low natural gas prices the primary driving force. A study by BTU Analytics concluded that natural gas priced near $2.50/MMBtu provides sufficient economic justification for shutting down coal plants and replacing them with newer gas generation. This switching is also driven by the flexibility of natural gas generation, which allows it to work in concert with other low or no emission generators, especially renewables.
Unlike coal power plants which cannot be efficiently started and stopped, new gas generation units can ramp quickly, meaning that they can serve to balance generation fluctuations from variable generation resources like wind and solar. A recent study published by the National Bureau of Economic Research found that a 1% rise in fast reacting natural gas generation was associated with a 0.88% rise in renewable generation. The authors, analyzing data from 26 OECD countries, concluded “that renewables and fast-reacting fossil technologies appear as highly complementary and that they should be jointly installed to meet the goals of cutting emissions and ensuring a stable supply.”
That “highly complementary” relationship is a simple one. Natural gas power plants provide power with reduced emissions, high reliability, and some price volatility; while renewables offer emission-free, low cost, fixed-priced power with variability in generation output. Married together, they offer high reliability, lower prices, moderate price stability, and reduced emissions.
There is irony in the fact that many of America’s most energy-rich states import the fuels currently essential to powering their lives and economies. The symbiotic partnership between natural gas and renewables is helping these states, including Texas, break their addiction to imported coal bringing wide-ranging economic benefits including energy independence, consumer savings on power, emissions reductions, rural economic development, and new tax revenue for governments and schools.
President-Elect Donald J. Trump has promised much to energy producers, leaving constituencies in the natural gas and coal producing communities hoping that their fortunes are about to rise. But, unlike the annual battle that plays out on the football field, the contest between West Virginia coal and Texas natural gas is already in the fourth quarter and fans are walking out of the stadium. Coal is not clean enough, affordable enough, or flexible enough to compete in the clean energy market of the future. Instead, the future will be dominated by a new group of states harnessing new technologies, their infinite renewable energy resources, and their vast supplies of cleaner-burning natural gas.