A new report by The Rocky Mountain Institute finds that natural gas-fired power plants, which have crushed the economics of coal, will soon be undercut by renewable power and big batteries.
As wind, solar, and energy storage technologies have improved and dropped precipitously in price,RMI research shows that “clean energy portfolios” (CEPs) comprised of these technologies are already cost-competitive with new natural gas power plants, while providing the same grid reliability services.
By 2035, 90% of proposed gas plants will be more expensive to run than to build new wind and solar farms equipped with storage systems.
As gas plants lose their edge in power markets, the economies of pipelines are projected to suffer too. Researchers warn this will happen so quickly that gas plants and pipelines now on the drawing boards will become “uneconomical before their owners finish paying for them”. In short, building new pipelines and gas plants today are mal-investment:
“Motivated in part by the increase in natural gas use for electricity generation, the industry has announced plans to invest an additional $30 billion in new interstate pipelines through 2024. But as the economic case weakens for gas power plants, new pipelines that would deliver gas to power plants will see their utilization fall dramatically. As the utilization of pipelines falls, the average cost of delivered gas [by them] will increase by 30%–140% from expected levels, imposing significant costs on customers and investors.”
Another new report, from the Energy and Policy Institute, explains that companies like Duke Energy have demonstrated a market “need” for new gas pipelines—which they partially own—by signing contracts with their own utilities, manipulating the system to make it seem like a more expensive investment is necessary. See: It’s now cheaper to build new renewables than it is to build natural gas plants. In short, the tipping point in favour of renewables and storage has arrived.
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