Changing the Mix


getmedia/a605ac32-20b1-4465-9a4f-23ea084d76d0/Changing-the-Mix_thumb.jpg.aspx?width=60&height=60&ext=.jpg

The latest monthly report from the U.S. Energy Information Administration (EIA) shows that for the first time since 2007, the U.S. generated as much net electric power from natural gas-fired plants as from coal-fired plants. Is this good news for the environment and a trend that's here to stay? Kent Saathoff, vice president for grid operations and system planning for the Electric Reliability Council of Texas (ERCOT), says it may be the latter.

Favorable Trend

The July data could reflect a lag due to this year's mild winter. Gas prices seen by ERCOT are very low now, and during certain periods of the year, such as spring, it's more economical to burn gas than coal. "It's hard to predict the future, but if the predictions are right, gas remains cheap, and if we keep getting environmental regulations that put coal at a disadvantage, I think it could be a trend," says Saathoff.

He also says the abundance of natural gas, and the fact that it's cleaner and cheaper is driving this trend. "Also, there are other areas in the country that are shutting down older coal plants. The logical replacement for them would be gas. We're fortunate in Texas. Our coal plants are relatively new compared to plants in other parts of the country. We have some of the higher technology coal plants with lower emissions," he says.

A Mix Is Needed

On the surface, this news appears to be an accomplishment, as cleaner air quality, lower costs to end users, and lower carbon dioxide emissions drive the reduction of use of coal and increase in natural gas in the U.S. "Gas is a lower polluter than coal, so environmentally there's an advantage. But, if your get too much generation from one fuel source, it's a higher risk situation," Saathoff says. "In the area of electric generation, it's generally not good to have all your eggs in one basket. It's optimal to have a mix of different fuel types."

ERCOT's energy mix pie chart.

"Gas is historically volatile, both price- and supply-wise," he says. "With new fracking technology discoveries and new shale gas fields opening up all over the country, such as in Philadelphia, Texas, and the Dakotas, natural gas may not be as volatile in the future. Even so, it's not necessarily a good idea to have all or most of the electric generation from natural gas in the country," Saathoff says. ERCOT's energy mix is 40% gas, 40% coal, about 10% nuclear, and around 10% wind and other including hydro, biomass, and solar.

Future Based on History

Saathoff believes the economics and regulatory climate will certainly push for more gas generation in some parts of the country. But other parts are much more heavily dependent on coal.

Texas has historically had a higher percentage of gas than other parts of the country. "We'll probably see other parts of the country catch up with us if the trend continues," he says. "Until the mid-seventies, we were 100% natural gas. When it became very expensive and the future was in question with the drilling technologies at that time, there was legislation to get off of natural gas as a boiler fuel in electric plants. Things changed and we started building coal plants, reducing our 100% dependency on natural gas. Since then, the supply and price situation changed. I think we'll see an increase in natural gas, even in Texas, where they're equal. History doesn't necessarily repeat itself, but it is always good to remember back in the seventies when natural gas didn't look as good as other fuels. This is another reason for the argument that it's good to have a mix.

Implications

Usually when demand for coal goes down, coal producers either shut down mines or find other markets for it, potentially overseas.

Saathoff says "One important implication of this news is that energy production no longer only involves the big two, coal and natural gas, but the fact that other technologies are also on the rise. The more baskets you have, the lower your risk is if any one of them is affected by supply or price. In Texas, we produce almost 10% of our power from wind, which is the highest percentage in the country."

Debbie Sniderman is CEO of VI Ventures LLC, a technical consulting company.

With new fracking technology discoveries and new shale gas fields opening up all over the country, such as in Philadelphia, Texas, and the Dakotas, natural gas may not be as volatile in the future.

Kent Saathoff, Electric Reliability Council of Texas (ERCOT)

getmedia/a605ac32-20b1-4465-9a4f-23ea084d76d0/Changing-the-Mix_thumb.jpg.aspx?width=60&height=60&ext=.jpg

September 2012

by Debbie Sniderman, ASME.org