FERC hearings examine gas- and coal-fired power, highlight low priority for renewables

Source: Robert S. Eshelman, E&E reporter • Posted: Monday, August 27, 2012

Government regulators are assessing the nation’s increasing dependence on natural gas as a source of electricity generation in a series of regional meetings around the country throughout the month of August. Advocates for renewable energy, however, express concern that in a “dash for gas,” the federal government may be overlooking the long-term reliability and emissions reduction potential of renewable sources such as wind and solar.

“This is a moment of transition for the energy system. For some time, there’s been a marked decline in coal generation and we’ve seen an increase in natural gas and wind,” said Kit Kennedy, clean energy counsel at the environmental group Natural Resources Defense Council. The top priority for her organization, she added, “is to push for better deployment of renewables and energy efficiencies. That is the pathway for a low-carbon future.”

The Federal Energy Regulatory Commission is convening a series of regional round tables with utility companies; natural gas pipeline operators; local, state and regional regulatory agencies; and natural gas providers to assess coordination between the natural gas and electricity sectors.

FERC cited widespread power outages in the Southwest in 2011 and the increasing amount of electricity generated by natural gas-fired power plants as reasons for the hearings.

At a meeting held at FERC headquarters in Washington, D.C., yesterday and focusing on the southeastern United States, Commissioner Philip Moeller said that despite regional differences in the way energy markets are organized, coordination between the natural gas and electricity sectors has national implications.

“The system is pretty much working so far, but there are challenges on the horizon,” Moeller said. “We may not have a crisis today, but part of our job is to anticipate problems down the road.”

Does loss of coal generation impair flexibility?

Jeff Wright, director of FERC’s Office of Energy Projects, projected natural gas production to increase from about 22 trillion cubic feet in 2010 to roughly 28 tcf in 2020. Shale gas extraction will account for most of the increase, he said.

That increasing role of gas and the uncertainty about what it means for electricity reliability are what worry Moeller and other FERC commissioners who convened the meeting.

In the past, when utilities needed to ramp up the amount of power they produced, they could turn to plentiful supplies of coal that were on standby in storage facilities, feed them into their coal-fired units and quickly boost generation in order to meet consumer demand.

The peaks and valleys of consumer and industrial demand might fluctuate widely during the day, utility representatives explained, and coal provided flexibility in meeting that demand.

Today, as tighter emissions regulations on power plants approach, utilities are increasingly turning to cheap and plentiful natural gas. Jeff Burleson of Southern Co., for example, said that of his utility’s 20,000 megawatts of coal-powered generation, 13,000 MW would remain online, while the company would retire 3,000 to 4,000 MW of generation and convert another 3,000 to 4,000 MW to natural gas generation.

Complicating the transition from coal to gas generation even further is the fact that utilities must purchase pipeline space through which to ship the fuel in addition to the gas itself. The schedules on which pipeline managers, gas producers and utilities forecast their operations are not always in sync, and utility representatives at the hearing expressed frustration at the uncertainty of knowing whether or not their gas orders could be filled on the time scale that they had grown used to during the decades during which they burned coal.

The switch from coal to natural gas energy generation has an upside, NRDC’s Kennedy said, in terms of reduced greenhouse gas emissions and improvements to air and water quality. But it also has its downside, she added.

“We are concerned that renewables are displaced due to the dash for gas,” she said.

Planning 2 decades into the future

A Massachusetts Institute of Technology study published this year bears out Kennedy’s concern. It found that an expanded natural gas sector risks “stunting” the growth of more stringent greenhouse gas-reducing technologies, like wind and solar generation or carbon capture and storage, for at least two decades.

The study concludes by saying of the U.S. natural gas extraction boom, “While taking advantage of this gift in the short run, treating gas as a ‘bridge’ to a low-carbon future, it is crucial not to allow the greater ease of the near-term task to erode efforts to prepare a landing at the other end of the bridge.”

Kennedy welcomed FERC’s efforts to promote communication between the natural gas and electric generation sectors and potentially intervene with policies that improve energy reliability and efficiency of use.

She asserted that unless Congress extends the production and investment tax credits for renewables that are set to expire, the federal government runs the risk of promoting an “overbuild” of the infrastructure serving the natural gas sector at the expense of the growing renewable energy sector.

“We’re concerned about continued growth of renewable,” she said. “In the last five years, we’ve seen the amount of renewables double. We want to continue that growth.”

At yesterday’s hearing, Gerry Yupp of Florida Power & Light Co. said the utility supports a more robust natural gas infrastructure. “It’s time to call for a third pipeline into Florida,” he said.

The state, according to Yupp, is the second-largest consumer of natural gas in the country and is limited geographically because it is a peninsula with only two current supply lines.

Other hearing participants said infrastructure buildouts should be considered but cautioned that because of the many regulatory hurdles involved and a potentially two-decade-long construction timeline, careful analysis is necessary.

“We do have to be looking at the how well the system works, and we’re glad that FERC is holding these workshops,” Kennedy said. “But we don’t want to jump to the conclusion that additional infrastructure is the answer without doing everything on the electric side to promote renewable sources and energy efficiencies.”