David Feldman

Myths of Energy - Cheap Natural Gas Is the Nemesis of Renewable Energy

Blog Post created by David Feldman Champion on Feb 2, 2017

With the increase in U.S. natural-gas production over the last few years, many people have come to the conclusion that renewable energies will be forced to take a back seat and suffer set-backs in advancement due to this new relatively clean, cheap fuel source.  While it is true that natural gas has been transforming the electricity sector, clean natural gas and renewables are actually friends, not enemies.

 

It’s not impossible (in fact if you look at recent trends, it’s probable) for two energy sources to grow together.  Natural-gas electricity generation jumped 34% from 2009 to 2012, while at the same time wind generation nearly doubled. (92% increase) Additionally, solar generation increased nearly 400% in the same time frame.  (We should keep in mind that renewables grew from a much smaller base compared to Natural-gas.)

 

There is truth to the argument that cheap natural gas makes it difficult for renewables to compete without federal subsidies, but most investors and researchers are finding that gas and renewables actually end up complimenting each other as part of a balanced electricity-generation portfolio.

 

Let’s take a look at it from the perspective of a utility company.  On the surface, natural-gas plants seem to be the better option because they have low upfront costs, they don't rely on unpredictable federal subsidies, and their output can meet swings in power demand.  It would be safe to say gas provides reliable power NOW, without having to worry about federal policies in the short term.

 

But…

 

Over the longer term, volatile gas prices could prove deadly.  And looking long term, environmental rules from Washington may have an impact as well. (Although this is looking less likely with the recent election of Donald Trump.)  Enter wind farms and other renewable energy sources.  These are appealing alternatives to diversify and hedge your power portfolio.  They differ from gas because almost all of their costs are up front, but after that, there's no fuel to buy.  This eliminates the worry about volatile prices.  And because renewable energy doesn't produce any harmful emissions, it doesn’t run the risk of future federal rules and regulations.  It may even benefit more in the future from government involvement. 

 

As we look at all types of energy sources, yes… they are competing.  But it’s not necessarily a zero sum game.  There’s room at the table for everyone. 

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