Natural gas, a bridge to nowhere?

[mblakele]

Colourless, odourless, buyerless
Unable to export its natural gas, Uzbekistan tries using it itself

[...] As if to underline the idea that exporting gas by pipeline was an unreliable way to earn a living, China cut its imports of Uzbek gas by two-thirds this year amid the coronavirus-induced economic slowdown, and Russia shut them off altogether. Those two countries sucked up 80% of Uzbekistan’s $2.3bn of gas exports last year, leaving Uzbekistan with lots of gas it has no way of selling.

The government’s solution is to consume the gas itself. Near the industrial city of Qarshi, it is pouring $3.6bn into a plant that will turn Uzbekistan’s gas into petrol and other liquid fuels, a process called gas-to-liquids. It is also encouraging the construction of factories that use gas as a feedstock to make plastics and other petrochemicals. A Chinese-owned PVCfactory, for instance, opened late last year about 140km from Qarshi. The plan is to end all gas exports by 2025, even as production of gas grows.

[...]​

 

[mspohr]

Morning Brief: Role of gas as a bridge fuel in US ‘just got shorter and narrower’

Role of gas as a bridge fuel in U.S. ‘just got shorter and narrower’: The natural gas revolution that has led to a power plant building boom and kept electricity prices low may be nearing its end, as the coronavirus pandemic has reduced demand for the fuel and competition from renewable sources of energy intensifies, said Dan Klein, head of scenario planning at S&P Global Platts. This spring, as the coronavirus shut down the economy, analysts projected that the renewable energy industry would emerge from the crisis in a stronger position as falling electricity demand hit fossil-fuel plants particularly hard. Adding to the pain for the natural gas industry, the health and economic crisis came at a time when the financial outlook for some plant owners was already deteriorating. “Gas was viewed as a bridge fuel between coal and renewables, and that bridge just got shorter and narrower.” Source: S&P Global

 

[SageBrush]

This spring, as the coronavirus shut down the economy, analysts projected that the renewable energy industry would emerge from the crisis in a stronger position as falling electricity demand hit fossil-fuel plants particularly hard.

Can someone unpack the idea here ?
I'd like it to be true but the reasoning escapes me.

 

[jerry33]

Can someone unpack the idea here ?
I'd like it to be true but the reasoning escapes me.

When demand falls, there is less need for peaker plants to turn on, so it's likely that renewables can fill the over-base-load demand rather than the expensive peaker plants. This reduces the overall demand for fossil fuels, leading to a surplus that has to be dumped at lower than cost of extraction and refining prices. Personally, I don't see any lowered demand at my house, but office buildings should be able to reduce their demand because of work-from-home.

 

[SageBrush]

When demand falls, there is less need for peaker plants to turn on, so it's likely that renewables can fill the over-base-load demand rather than the expensive peaker plants. This reduces the overall demand for fossil fuels, leading to a surplus that has to be dumped at lower than cost of extraction and refining prices. Personally, I don't see any lowered demand at my house, but office buildings should be able to reduce their demand because of work-from-home.

Sure, but I thought they were saying that renewables emerge post covid-19 in a stronger position

I'll phrase this differently: Does covid change the long term trajectory of NG ?

 

[David_Cary]

I am not sure I buy that renewables will do better because of Covid.
Personally, I lost excess from solar because I didn't use it. I wasn't driving enough so on May 31, I lost all my net metering credits.
Build solar and don't use it seems generally a bad idea. Build a peaker plant and don't use it - is a less bad idea. When people look at costs, they add in fuel. Obviously the solar costs the same but the NG cost goes down if you don't use it.
None of this changes the long term math favoring solar but I don't see falling demand changing the numbers much.

 

[jerry33]

Sure, but I thought they were saying that renewables emerge post covid-19 in a stronger position

I'll phrase this differently: Does covid change the long term trajectory of NG ?

I'd suggest it speeds up its demise. Peakers are NG, so reducing peaker use makes NG less profitable, and renewables more profitable (or at least no reduction in profitability). Similar to Tesla, if renewables can sell all they can make...

I guess the idea is they will be relatively stronger.

 

[mspohr]

Sure, but I thought they were saying that renewables emerge post covid-19 in a stronger position

I'll phrase this differently: Does covid change the long term trajectory of NG ?

Recently the demand to install solar has increased. People are looking for resilience and lower cost. More solar, less NG.
(See Solar PV News thread)

 

[SageBrush]

Recently the demand to install solar has increased. People are looking for resilience and lower cost. More solar, less NG.
(See Solar PV News thread)

That is chump change. How about utility/large scale renewables

 

[mspohr]

That is chump change. How about utility/large scale renewables

US corporate solar market grew by 1.3 GW in 2019, reaching 8.3 GW total

 

[SageBrush]

US corporate solar market grew by 1.3 GW in 2019, reaching 8.3 GW total

OK, but put it in the context of a transition to clean energy after correctly for the baseline growth. It is a rounding error

 

[jerry33]

OK, but put it in the context of a transition to clean energy after correctly for the baseline growth. It is a rounding error

Agreed, but the more important point is how many new facilities are proposed. In Texas it's almost all solar with some wind.

 

[SageBrush]

Agreed, but the more important point is how many new facilities are proposed. In Texas it's almost all solar with some wind.

I came up with one answer ...

The clean energy industries have been active enough during the Covid-19 depression that they have not had to close factories, fire workforce, stop R&D or eat into their capital reserves. When growth returns they are stronger than their fossil counterparts.

I imagine that is the argument but I'm not sure how it plays out when the competitor is an extraction industry that is just sitting on developed resources.

 

[jerry33]

I came up with one answer ...

The clean energy industries have been active enough during the Covid-19 depression that they have not had to close factories, fire workforce, stop R&D or eat into their capital reserves. When growth returns they are stronger than their fossil counterparts.

I imagine that is the argument but I'm not sure how it plays out when the competitor is an extraction industry that is just sitting on developed resources.

Decent answer. Fossil fuels can't be used as is, they have to be refined first. Renewable energy goes right from source to power. (in a fossil fuel context, that would be going straight from the pump (or mine) to power.)

 

[mspohr]

OK, but put it in the context of a transition to clean energy after correctly for the baseline growth. It is a rounding error

Renewables an EVs have been dismissed as a rounding error for years but are be gaining significance due to steady investment and dropping costs. It would be foolish to bet against them.

 

[SageBrush]

Renewables an EVs have been dismissed as a rounding error for years but are be gaining significance due to steady investment and dropping costs. It would be foolish to bet against them.

I am not betting against them at all. My point was that the 1.3 GW of commercial PV in 2020 should be compared Vs that in 2018 and 2019 if you want to tease out the Covid effect.

 

[mspohr]

I am not betting against them at all. My point was that the 1.3 GW of commercial PV in 2020 should be compared Vs that in 2018 and 2019 if you want to tease out the Covid effect.

Shoals, solar balance-of-system player, had a strong 2020 and sees an even stronger 2021

DS: Last year was great for solar in the United States and we thought, ‘that’s going to be a hard one to top off.’ And now 2020 is topping 2019, and we know that 2021 is going to go even further.

DS: A lot of people thought that the 100 MW fields were all dead, but those suckers are coming back with a vengeance. We are seeing lots of 220 MW, 250 MW, 500 MW, 750 MW projects – we are even seeing two 1 GW-plus sites taking shape.

 

[TheTalkingMule]

I'm reading this as FERC protecting gas peakers from losing their jobs to batteries which can balance loads for 95% less.

FERC's Glick blasts fellow commissioners for intruding on New York's resource mix decisions

• The Federal Energy Regulatory Commission on Wednesday removed an exemption that had allowed some demand response resources to bid into the New York Independent System Operator (NYISO) capacity market below generation offer floors.
• In a 2-1 decision, the commission determined that payments received under the Commercial System Distribution Load Relief Programs (CSRP) submitted by the ISO "do not qualify for exclusion from the calculation of [Special Case Resources] (SCR) offer floors." FERC's decision means these demand response resources, which are compensated by New York distribution utilities for their grid services, will have to bid in at a higher price and be less competitive.
• Commissioner Richard Glick dissented from the decision, writing that it "perverts buyer-side market power mitigation into a series of unnecessary and unreasoned obstacles to New York's efforts to shape the resource mix."

 

[mblakele]

The EU’s green rules will do too little to tackle climate change
from The Economist

[…]​

​

The plan to label natural gas as green has been controversial, too. But the rules reflect a hard-headed assessment that it will be a vital transition fuel in the next decade. They treat gas projects as green for a limited period, if they replace dirtier fossil fuels, receive approval by the end of the decade and contain plans to switch to cleaner energy sources by 2035.​

​

[…]​

​

By contrast, putting a price on carbon sends a signal that reaches across the whole economy, not just into listed firms, and fully aligns the profit motive with the objective of cutting emissions. The eu’s main carbon-pricing scheme is the rich world’s largest but, although work is going on to expand it, it covers only 41% of emissions. If the eu wants to lead the world by unleashing the power of finance to combat climate change, the carbon market is where it should be focusing its efforts.​

 

[iPlug]

The United States became the world’s largest LNG exporter in the first half of 2022​

The United States became the world’s largest LNG exporter in the first half of 2022