Utilities, firms launch $100M plan to shift from natural gas
Several of the country’s largest utilities launched a $100 million initiative yesterday to develop alternatives to natural gas across energy sectors — and potentially head off looming threats to their businesses.
The Low-Carbon Resources Initiative (LCRI), organized by the nonprofits Electric Power Research Institute and Gas Technology Institute, will seek to bring several early-stage technologies to commercial scale by 2030.
Advisers from each of the member companies will elect demonstration projects and decide initial investments. Early areas of focus will include hydrogen, biofuels, ammonia and synthetic fuels, GTI and EPRI said.
The initiative’s 18 “anchor” members include gas utilities like Southern California Gas Co., (SoCalGas) and some of the nation’s largest electricity providers, like Duke Energy Corp. and Consolidated Edison Inc. They also include Japan-based manufacturer Mitsubishi Hitachi Power Systems and several public utilities, like the Tennessee Valley Authority. EPRI will provide $10 million in seed funding.
“There’s been a lot of efforts in the electrification space” from utilities and other actors, said Neva Espinoza, a director for the power generation sector at EPRI and an executive sponsor of the initiative.
But when it comes to other, nonelectrified alternatives to natural gas, she added, “I don’t know of any effort of this scale and with this integration across the electric and gas sectors.”
Some of the technologies intended to be an alternative for gas — such as hydrogen — have a variety of uses, from power generation to steelmaking. But all of them could be transported through existing natural gas pipelines, meaning they might serve as low-carbon options that compete with electric-based technologies and give gas utilities a chance to transform their businesses.
The move comes as many analysts predict increasing battles between utilities and state officials over the future of natural gas. In California, SoCalGas, the nation’s largest gas distributor, sued energy officials this month over their plans to reduce the use of the fuel and replace it with electric solutions, for example.
Several of the initiative’s companies, like Duke and Dominion Energy Inc., have a goal of eliminating or offsetting all of their CO2 emissions by 2050. Other investor-owned companies are seeking to hit the sectorwide mark of 80% reductions by midcentury.
Managers at EPRI and GTI said the initiative had formed to meet the 80% goal or beyond, which has been embraced by the industry association Edison Electric Institute.
“The driver for this is reaching deep decarbonization by 2050,” said Mike Rutkowski, GTI’s senior vice president of research and technology development.
Hydrogen and climate targets
In the first quarter of 2021, technical advisers from the company members will produce a road map with priority investments and objectives for the next five years.
The anchor members, said Rutkowski, will contribute most of the $100 million laid out as an initial goalpost for investment, but the initiative will also try to lure outside financing for its demonstration projects.
The coalition hopes to encourage technologies with crossover potential in decarbonization, meaning they would become sources for heavy industry, long-haul trucks and other uses typically regarded as too energy-intensive for electric replacements, he added.
The investments might also become a key plank in utilities’ path to net-zero emissions, supporters said. Many of the net-zero road maps to emerge from utilities for 2050 have lacked details, with companies saying that the world lacks the technologies necessary to decarbonize while maintaining the grid’s reliability.
“There are some companies that feel they have a very clear pathway to net zero,” said Espinoza of EPRI. “There are others that feel theirs is not quite as clear, and it’s not at the cost or reliability that we’ve become accustomed to.” The initiative, she added, would create new options by driving down costs.
For hydrogen, an element with sky-high expectations among energy researchers, the initiative may also give new definition to how it will be produced, stored and transported, said spokespeople for Dominion Energy, whose chief innovation officer referred to the element as “one of the most promising” sources of energy to be studied.
The initiative earned a wary response from one advocate of electric-powered technologies, Jenna Tatum, director of the Building Electrification Initiative.
The $100 million investment, she said, was “a lot of money.”
“I’m not going to criticize additional research in technologies,” she said. “But I remain concerned that the gas industry will use the initiative as a reason to put off investments in electrification.”
Electric technologies that could replace gas as a fuel for buildings, added Tatum, are already widely available. “We have the technologies,” she said. “They’re tried and true. … We just need to scale up implementation of them as much as possible.”