Longer term electricity demand should grow again at an average of up to 3% annually, and that bodes well for growth in the use of natural gas in the electric generation sector, ICF International energy consultant Kevin Petak told a GasMart 2010 audience in Chicago Tuesday. Coal will lose ground while natural gas looks to be a big part of the growth in the generation sector over the next 20 years.
Petak said the gas load used for power generation during the past decade jumped from 5.3 Tcf to 6.9 Tcf, and he sees the opportunity for even larger growth in the decade ahead, given a rebound in the economy and the prospect of national climate change regulation. There will be opportunities for gas in the power sector “with or without” carbon legislation, said Petak, an ICF vice president.
“We expect this growth to continue in the power market,” said Petak, who noted that ICF analyses assume that a 3% annual growth rate in the economy will return and there will eventually be a carbon policy by 2015 along the lines of the Waxman-Markey bill, which passed the U.S. House of Representatives last year. He acknowledged that in the near-term, gas growth will be “sluggish” as it has been the past 18 months.
“In the longer term, we see a much more dramatic increase in gas use for power generation when you look at all the other sectors,” Petak said. “Electric load is a very important parameter in our overall gas projections.” He said in ICF’s projections electric load grows at about 1.4% annually in the next few years when the two growth areas overall in energy are in natural gas and renewables.
“The big source of growth is in the power sector,” he said. “It is widespread geographically across the United States with the biggest growth in the Southeast. And that is where gas used for power generation sets up the best. There is currently a lot of underutilized gas capacity on the ground in the United States, so you could meet some of the electric generation load growth by using the capacity that is already out there.”
Petak said the perception that renewable growth will curb some of the growth in gas for power generation might not hold true because of the intermittency of wind and solar. “Think of it this way, the renewables are going to be taking some market share away from gas on the one hand, but then creating market share on the other [with the added need for back-up power to offset the intermittency],” Petak said. “It depends on how the renewable energy standards are set.”
In California the proposed 33% by 2020 standard actually grows the use of natural gas, he said.
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