By George Harvey
As the Canadian multinational giant Enbridge seeks to push natural gas, including trying to push it to Green Mountain Power in Vermont, it is time for everyone involved to take a hard look at the numbers. I am including not just citizens and legislators when I say that. I mean EVERYBODY. That includes not just the directors of utilities, but Enbridge itself, its board of directors, its investors, and anyone who might be tempted to loan it money.
I believe natural gas is what some people term a dead man walking. And the numbers show this clearly.
The wholesale cost of electricity generated by natural gas ranges upward from $41 to $74 per megawatt-hour (MWh), according to Lazard’s Levelized Cost of Energy Analysis – Version 12.0, the company’s latest release, which appeared late last year. We could compare that with the $36 to $46/MWh from solar arrays or the $29 to $56 for windpower. We could make that comparison, but if we do we should bear in mind that the cost of electricity from solar and wind has gone down in the last year, while the cost of electricity from natural gas has not.
And for those who love to chant, “The sun doesn’t always shine and the wind doesn’t always shine,” I have an answer that is good news to everyone but those in the fossil fuels or nuclear industries. While Lazard puts the cost of electricity from natural gas peaking plants at $152 to $206/MWh, the cost of energy from batteries is just a very small fraction of that.
Recently, the city of Los Angeles has negotiated a deal to buy 7% of its electricity from a plant that combines solar photovoltaics and batteries. The cost of the solar electricity is $19.97/MWh, and the cost of electricity from battery storage is $13/MWh. That is less than 50% of what natural gas would deliver for the straight electricity, and less than 15% of the cost of peaking plants.
The numbers here are clear. Natural gas is not just being outclassed for price. It is being demolished. And a clear conclusion to draw from that is is that any money spent on natural gas, whether it is building power plants or pipelines, is money spent on what is likely to become a stranded asset. And not just soon. I mean possibly almost immediately.
It is not just cheaper to buy renewable energy and batteries than to buy energy from natural gas. It has come to the point that relatively new gas-burning plants are closing because it is cheaper to buy renewable energy than to keep the gas plants running. And while the cost of solar power is higher in Vermont than in California, it is not enough higher to excuse putting money into technology that is rapidly becoming archaic.
That is not just true for power plants. It is also true for households. It is very often cheaper to replace a gas-powered heating system with heat pumps than to keep burning gas.
In fact, the cost of renewable power is falling so low that in many parts of the world utilities are beginning to use renewable energy to produce hydrogen gas as a less-expensive alternative to natural gas.
I will caution the reader that I am not a financial adviser. I am, however, a person who spends a lot of time analyzing the news. From that perspective, I can say I am firmly convinced that the only things pushing natural gas are types of thinking that are very short sighted. Because I know there are other possible explanations, I will refrain from using the words “lunacy” and “corruption.”
By the way, the Northern Territories of Australia, with a population of less than half that of Vermont, is looking into a project to put up a 10-gigawatt solar array and 30 GWh of battery to sell power to Singapore. The electricity would flow through a cable about 2,000 miles long. Why would they do this? Because they can provide power cheaper than coal or natural gas. And when you think of the fossil fuels available in Indonesia, which lies between the two end points, that is saying something. The world is changing fast.