Future Natural Gas Prices Research Articles

Decarbonization of the Indian electricity sector: Technology choices and policy trade-offs

SummaryIndia is the third largest CO2 emitter worldwide, and its electricity demand, which is primarily supplied by coal-fired generation, is expected to increase almost threefold over the next twenty years. Here, we simulate 40 scenarios for the 2040 Indian electricity sector, considering uncertainty in future natural gas prices and costs for batteries and variable renewable energy (VRE) technologies, under different CO2 emissions limits and renewable portfolio standard (RPS) targets. We find a large-scale expansion of VRE, particularly, solar PV, in most scenarios. Furthermore, energy storage competes with natural gas and coal to provide flexibility to integrate VRE. Given a set of technology assumptions, policies that explicitly limit CO2 emissions are more cost-effective at reducing emissions than RPS policies. The former are also more effective at reducing air pollution than RPS policies by explicitly penalizing CO2 emissions, thereby reducing coal generation more substantially than RPS policies.

The costs and value of renewable portfolio standards in meeting decarbonization goals

Renewable portfolio standards are common policy instruments deployed in many U.S. states and other countries. Arguably the primary driver for these standards is their use as a tool to reduce carbon dioxide (CO2) emissions from the electric sector. The cost-effectiveness of this mitigation approach relative to other policies is hotly disputed. In this paper, we use the US-REGEN model to evaluate the costs and CO2 emissions reductions of existing and potential renewable portfolio standards in the United States, and to compare these mandate-based policies to the least-cost resource portfolio that achieves equivalent CO2 reductions. We find that, in most cases, renewable portfolio standards are approximately twice as costly as the equivalent least-cost portfolio for achieving CO2 reductions, although the ratio can be much higher for standards with lower abatement. Furthermore, the effectiveness of renewable portfolio standards at reducing CO2 emissions depends strongly on future natural gas prices. Technology-neutral instruments to achieve CO2 reductions usually replace existing coal generation with the cheapest alternative, given natural gas and CO2 prices. A mandate for renewables is higher cost both because renewable generation may not be the cheapest alternative to coal generation, and because adding renewable capacity often displaces non-coal generation on the margin when there is no CO2 price.

Assessing the value of power interconnections under climate and natural gas price risks

The value of transmission capacity is hard to assess due to the presence of different issues: physics of power networks, economics of power systems and reliability criteria. Evolving supply and demand trends, however, create interest in increased transmission capacity, especially between jurisdictions with complementarities. Assessing the value of such interconnections is key in analyzing the viability of these projects. Based on a data set containing 10 years of hourly power flows and prices, daily temperature and natural gas prices, as well as climate change forecasts for 2020 and 2050, we simulate export revenues for a DC (direct current) interconnection between Quebec (Canada) and New York (US) under different natural gas price scenarios and extreme heat events. Our innovative approach, combined with an extensive data set, provides a prospective assessment of the value of new transmission projects. Our results suggest that future natural gas prices would be the main driving factor of future revenues on a transmission line, with climate change having a relatively much smaller impact on future revenues.

Impacts of Shale Gas Advancements on Natural Gas Utilization in the United States

AbstractOver the past six years, U.S. shale gas innovations have resulted in a transformation of the U.S. energy marketplace. The impact is initially taking hold in North America but will likely be experienced throughout the world over the next two decades. Shale gas effects were most immediately impactful in terms of natural gas supply and prices, with consumers benefitting from over $ 100 billion per year in energy cost savings. New gas supplies and lower prices have spurred a wave of demand responses in the industrial, power generation, transportation, and energy export sectors. The full implications of actions underway in each of these market sectors are still unfolding. The coming decade will afford greater insights on shale gas resource base estimates and marginal production costs and ultimately lead to better knowledge of where the longer‐term U.S. natural gas supply/price/demand equilibrium point may reside. Investors across these sectors are forging ahead with major plant and market development investments in anticipation that future natural gas prices remain attractive. These sectors are projected to add as much as 147 billion cubic meters of additional demand by 2025, led by liquefied natural gas exports and power generation.

Integrating transmission into IRP part II: case study results

This is Part II of a two paper set dealing with transmission and integrated resource planning. Part I described an analytical approach to integrating transmission into the IRP framework and set forth the Comprehensive Electrical Systems planning Model (CESPLAN). The model, a mixed integer, nonlinear, stochastic programming formulation of the planning problem is solved using the generalized Benders decomposition algorithm with importance sampling to couple the contingency state space. The primary objective of this paper is to report a series of case studies performed with the model. Three sets of case study results are reported. The first set illustrates that optimal resource plans created from the commonly used utility approach of two-step planning, i.e., first planning generation and demand-side resources and then determining the set of transmission resources that "best matches" the generation and demand-side plan, can lead to higher costs than when a more comprehensive, integrated planning approach is adopted. A second set of case studies illustrates the use of "importance sampling", a procedure for reducing the number of sample configuration states of the system that must be simulated when estimating the effects of equipment outages on future system operating costs. The third set of studies illustrate not only the optimal generation plan but also the optimal transmission plan is sensitive to planning uncertainties such as emissions allowance costs, customer outage costs, and future natural gas prices.< <ETX xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">&gt;</ETX>