There’s more interest than ever in increasing coordination between the U.S. gas and electric sectors. Each market now depends more heavily on the other than ever. Yet significant hurdles remain, many stemming from fragmented and distinct regulatory regimes and deeply entrenched operating practices on both sides.
Rising demand for electricity to serve data centers, manufacturing and other power-consuming sectors of the economy is spurring the development of scores of gas-fired plants — up to 100 gigawatts (GW) of new capacity by 2040. How much power those new plants will actually generate — and, with that, how much natural gas they will require — remain open questions, however. A recent study indicates that the vast majority of incremental power demand over the next 15 years could be supplied by solar and wind and that gas demand for power may remain pretty much flat. But the Trump administration’s dim view of most renewables — and clear preference for fossil fuels — suggest otherwise. In today’s RBN blog, we discuss gas demand for power in the late 2020s and 2030s.
There’s finally some good news for folks in Texas: it’s gradually getting warmer, and the power outages that left much of the Lone Star State in the cold and dark the past few days should keep winding down. But what are we all to make of what just happened? How could a state blessed with seemingly limitless energy resources of every type — natural gas, coal, wind, and solar among them — end up so short of electricity when it needed power more than ever? It turns out that the electric grid that the vast majority of Texans depend on day in, day out is designed to perform very well almost all the time, but is susceptible to a rapid unraveling when an unfortunate combination of events hit. Today, we continue our review of how this week’s extraordinarily low temperatures have been impacting energy markets — and many of us.
As U.S. electric utilities become increasingly dependent on natural gas-fired power, they’re looking for ways to mitigate the risk of future gas-price volatility. One hedging option that’s gained some attention lately is direct utility investment in natural gas production assets, the idea being that by acquiring gas-in-the-ground—especially now, when gas prices seem low and many financially strapped gas producers are eager to make deals—utilities can lock in the price of at least part of the future gas needs. Today, we consider the latest efforts by electric utilities to expand their gas hedging strategies—and hold the line on future gas prices—by including direct investments in gas production assets.
