From coalbed methane to digester gas, solar photovoltaics to wind generation, natural gas has a stake in the burgeoning push for energy alternatives that now sees 22 states and the District of Columbia enacting renewable portfolio goals for electricity production, a panel of gas industry executives told The LDC Forum: Rockies & West Tuesday in Los Angeles.
In reaffirming global energy giant BP’s multi-billion-dollar bet on alternative energy, Darrel Thorson, a vice president for gas-fired development in the West, told the conference participants there are four main drivers in back of the alternative energy push: (1) security, (2) environmental constraints, (3) global supply challenges, and (4) demand growth. (BP is the world’s third largest manufacturer of solar photovoltaic (PV) cells, although that production still equals only about 100 MW of capacity annually, Thorson said.)
“Diversity of domestic energy sources for producing electricity can be critical to improving the United States energy security,” Thorson said, acknowledging that alternative energy often comes from what he called “more politically and technologically challenging locations, which makes more and more people willing to pay a premium for domestic forms of energy.”
But it is the projections for worldwide electricity demand growth that are the prime reason that BP has “seriously jumped in the alternative energy sector,” said Thorson, citing the fact that over the next 25 years world energy consumption for power production is going to double. “In that period, there is going to be a lot of pressure on hydrocarbon reserves, which will still be the fuel-of-choice for power generation.”
In summary, Thorson offered a “commercial” for BP’s overall efforts in the alternative energy space, ticking off a list of to-do’s that included: two cogeneration projects next year, more than 500 MW of wind-generation projects in 2007, expanded use of hydrogen as a fuel around the world, and tripled production of solar PV cells with research spending to reduce the costs of the solar panels.
Louis Szablya, director for Citigroup Energy in Houston, said the push for renewable energy standards promises to have a profound impact — locally, regionally and nationally — on natural gas, even though he thinks gas will continue to be the fuel-of-choice for power generation.
“I think renewables are here to stay, and they are going to be a growing component of the energy industry,” Szablya said. “And wind is a very important part of that portfolio. It’s the biggest and fastest growing energy source in the renewable sector right now.”
Over time, Szablya said that all of the added wind-generated megawatts will be displacing natural gas. “The impact of the California RPS standard is definitely going to impact the resource mix and how natural gas is used to generate electricity,” he said.
Two big unknowns, the panelists agreed, are how far technology developments will help drive down costs of solar equipment and how quickly the nation can expand the transmission grid to accommodate wind and other remotely located renewable resources.
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