Monday, August 5, 2013

Gas-Electric Integration “Swamps” All Other Issues

If you are interested in the power industry, this is pretty well a "must read" 

Gas-Electric Integration “Swamps” All Other Issues :: POWER Magazine:
Panelists at the ELECTRIC POWER 2013 Keynote and Roundtable Discussion in Chicago in May were consumed by the need to ensure future reliability by more closely integrating the gas and electricity markets. Acknowledged less directly were distortions created by renewable energy subsidies and mandates, onerous regulations affecting coal, and “irreversible” demand destruction caused by the success of energy efficiency and demand management programs. The elephant in the room was the continued demise of electricity markets....Unlike past years, no one questioned the shale gas resource estimates (Figure 1), just the ability to get it to a power plant when needed. If the writing on the wall about the impact of the domestic shale gas bonanza was visible to these industry leaders before, in this session it glowed in neon against the darkened sky of high winds, a fading spark spread, little if any dark spread to support new coal, and continuing threats to a critical zero-carbon option, nuclear power.
...The domestic shale gas resource is “incredible
...The “market” doesn’t value capacity, was one refrain, and certainly not baseload capacity. Another critical observation was that a just-in time (JIT) natural gas delivery system is clashing with the JIT electricity delivery system.
Overlay onto that clash “must take” highly intermittent wind- and solar-generated electricity, plus demand destruction through energy efficiency, plus demand side programs.
Read the entire article at POWER Magazine
...Mark McCullough, executive VP, generation, American Electric Power (AEP), then expanded on the gas theme, noting that proven gas reserves have doubled in recent years, and potential reserves “are incredible.” The nation’s annual burn is 25 tcf, while the future resource is 2,700 tcf. McCullough described a ceiling of $4–$6/MMBtu for gas prices.

Federal Energy Regulatory Commission (FERC) Commissioner Philip Moeller amplified the one-fuel note, stating that gas is “swamping” other fuel options, for five reasons:
  • It’s easier to build and finance a gas plant.
  • It’s easier to add gas capacity near load than to build transmission.
  • Gas plant ramping is a solution to intermittent renewable energy. (He called the ramping in California that takes place many afternoons “amazing.”)
  • Coal faces a regulatory tsunami, with Mercury and Air Toxics Standards (MATS) at the center of it.
  • Gas prices appear to be relatively stable.
On coal
...The parasitic load for a 1,300-MW unit with CCS [carbon capture and storage] is 300 MW. Polsky countered that coal with CCS will not be the low-cost option.
Mohre offered the issue that everyone was happy to ignore. McCullough noted that the coal industry is exporting lots of coal, making up for lower consumption in the U.S. Mohre later asked, “How right is it to ship 100 million tons of coal and burn it in other countries?” That lower consumption is occurring because, stressed McCullough, 60 to 70 GW of coal will be retired because of MATS. Much of that coal capacity, he added, is providing ancillary services, in part to address renewable energy integration.
On Demand
Industrial load growth has declined for three quarters in a row in AEP’s service territory. Source: AEP
How real was underscored by other panelists. A 1% rise in gross domestic product used to lead to a 1.6% rise in electricity demand, he said. Today, the associated demand figure is 0.3%.

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