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Concentration of CO2 in the Atmosphere

EIA Projects Huge Decline for Natural Gas Generation

Renewable energy and battery storage lead the country’s new energy production

George Harvey

We have stunning news from the U.S. Department of Energy’s Energy Information Administration (EIA). Admittedly, you have to look beyond the fluff to see it, but it is stunning nevertheless.

About two years ago, the companies that make turbines for natural gas plants were reporting a serious fall in sales. GE was suffering especially badly because it had misread the market. It had bet heavily on increased sales of turbines for natural gas power plants, because fracking had pushed the price of natural gas low. The trouble was that the low cost of gas did not translate into increased turbine sales.

Unlike GE, we at Green Energy Times had expected that the decline in turbine orders presaged a fall in natural gas capacity additions. (Please see “The End of Fossil Fuels is In Sight,” http://bit.ly/GET-goodbye-fossils, in the June, 2018 edition.) We believed natural gas plants that were already on order would be completed to recover investments already made in them. But after that, new capacity looked very uncertain, because even with low gas prices, natural gas capacity was not competing well with renewables.

Now, in 2021, the EIA has sent out a report with projections on what electric generating capacity additions are expected for this year (http://bit.ly/EIA-planned-capacity). It shows that natural gas capacity additions are expected to be about 6.6 gigawatts (GW) in 2021, compared to 8.56 GW in 2019 (http://bit.ly/FERC-dec-2019) and 11.98 GW in 2017 (http://bit.ly/FERC-dec-2017). Natural gas new- capacity additions have been falling at an average rate of 14% per year.

The reason for the slowing of natural gas installations is that renewable energy costs keep falling rapidly. Now, they are below the cost of natural gas in most places. Clearly, the gas industry is in decline, and it is likely to remain so in the long term.

This is where things get really interesting. Along with these changes, we now have a new factor exerting its influence. It is the growth of large-scale battery energy storage which can serve to keep renewable energy going constantly, whether the sun shines or not, and no matter what the wind speed may be. The cost of batteries has fallen 88% in the past ten years, according to a recent article at Ars Technica (http://bit.ly/AT-battery-costs). And now, energy from batteries charged by renewables is competing with the least expensive energy from natural gas plants.

To see how fast batteries are growing, we can go back to the graph the EIA used to illustrate its press release. We can note that battery storage is projected to account for 11% of all capacity additions this year. We could look at the fact that this figure is getting close to the 16% expected to come as natural gas plants and loudly say, “Wow!” But before we do that (and get ready for this!), we should take note of the fact that on earlier charts, batteries do not appear at all. Batteries are a new entry this year, and they are already challenging what was only recently the leader.

Solar power is expected to provide 39% of new capacity. Wind’s share is to be 31%. Natural gas is number three at 16% (this does not include the loss of retiring plants). Grid-scale battery storage is to provide 11%. And nuclear is expected to come in at 3%. Since the batteries do not produce emissions and back up solar and wind power, we should probably include them among renewable resources. If we count them so, 81% of expected additions would be renewable.

What happens after this year is relevant. Laws of economics indicate that the cost of solar, wind power, and batteries will continue to fall, and with them the cost of the electricity they make. Over the next few years, natural gas will almost certainly find making money increasingly difficult. This year’s additions were already in the works, and the ground was already broken for them. But in this market, it is hard to imagine any reason for anyone to invest in a new natural gas plant.

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