(Bloomberg) – This will almost certainly be a record year for the progress of solar and wind power in the United States. The current or planned additions are significant enough to boost hopes for zero-emission electricity grids within a generation. when natural gas is out of the way.
It can only be. Gas is such a bargain that it is viewed less as a fossil bridge fuel that drives the world from dirty coal towards a future with cleaner energy, and more as a hurdle that could slow the journey. Some forecasters expect prices to remain low for years, making it difficult for states, cities, and utilities to achieve their goals of carbon-free production by 2050 or earlier.
“The fact that there is an abundance of them makes complete decarbonization very difficult,” says Ravina Advani, Head of Energy, Natural Resources and Renewable Energy at BNP Paribas SA. Gas is a tough competitor. “It is reliable and cheap.”
The flood of cheap gas has a huge environmental benefit as it puts increased pressure on coal-fired power plants that are contributing significantly to global warming. But it also depresses margins for nuclear reactors, which are the largest source of carbon-free electricity in the United States. And it drives energy suppliers to build an infrastructure that could ensure that gas remains at the center of the electricity mix for decades.
In many markets, solar and wind surely win on the basis of price alone. However, without cheap gas, the expansion of renewable energies would be faster, says Cody Moore, head of gas and electricity trading at Mercuria Energy America LLC. “Absolutely 100%.”
Just take a look at the largest network in the United States, which stretches from Washington to Chicago and supplies more than 65 million people: it has increased the amount of electricity generated by gas and has been slow to use renewable energies. This network crisscrossed a part of the United States where some of the world’s most common natural gas reserves are located. A drilling boom there and in the Permian basin in Texas and New Mexico is one reason why the US gas reference price is less than $ 2 per million British thermal units. This is the lowest value for this season since the late 1990s. In Asia, prices fell to a record low of less than $ 3 this month as global supply was overcrowded and the corona virus slowed demand from China. In Europe, the Dutch reference price hit a decade low. “This is not good for the new energy market,” says Jonathan Bell, business development manager at risk assessment and quality assurance company DNV GL. “It puts a lot of pressure on renewable energies.”
Increasing exports of liquefied natural gas from the US Gulf Coast to Siberia are likely to keep prices low and increase developing countries’ dependence on fuel. The International Energy Agency expects global gas consumption to increase by 2040. “We use solar and wind more than ever, but until we are very focused on extracting some of the fuels we use, history shows us that market forces alone are not successfully displacing fossil fuels from the energy mix,” says Noah Kaufman Researcher at Columbia University’s Center on Global Energy Policy.
None of this means that renewable investments in the United States were not at risk. According to BloombergNEF, they rose 28% last year to a record $ 55.8 billion. According to the US Energy Information Administration, renewable energy will be the fastest growing power source by 2050, accounting for 38% of generation.
Read more: How much countries use renewable energy
Of course, this is not the percentage that the state of California, the city of Pittsburgh, and Minneapolis-based energy company Xcel Energy Inc. have imagined, which are governments and power companies whose target dates are between 2030 and 2030 for carbon emissions cleaning in 2050 from their networks. Regardless of the price, natural gas still has to fill the gap for a while, as renewable generators need the power of wind or sun to do their job. Battery storage technologies, which could reduce the interconnection of all networks to fossil fuels, are only slowly being added to the systems.
Without them, “we cannot become 100% renewable,” says Tom Rumsey, senior vice president at Competitive Power Ventures, which builds both gas-fired and renewable plants. “There are these Moonshot goals that govern policy behavior. However, the reality is how you can maintain network reliability without breakthrough in storage. You will need fossil fuels. “
Forecasters, political decision-makers and, increasingly, business leaders largely agree that solar and wind will ultimately prevail. Ultimately, “gas plants will be the same reality as coal,” said Jules Kortenhorst, chairman of the Rocky Mountain Institute, a nonprofit organization focused on a low-carbon future. “It’s just a matter of time.” Gas prices can define the answer.
(Michael R. Bloomberg, founder and majority stake in Bloomberg LP, the parent company of Bloomberg News, has provided $ 500 million to launch Beyond Carbon, a campaign to shut down remaining coal-fired power plants in the U.S. by 2030 and to slow construction new gas systems.)
(Adds a quote in the 11th paragraph. An earlier version corrected a unit in the seventh paragraph.)
– With the support of Vanessa Dezem, Francois De Beaupuy and Will Mathis.
To contact the editor responsible for this story: Anne Reifenberg at [email protected]
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