Smart Gas Investment
The low price and relative abundance of natural gas bring good news for both consumers and society. Consumers benefit from cheap gas and society benefits from the availability of gas to help reach emissions reduction targets for 2030 and 2050. However, if we lean too much on gas in the near term, that low cost and abundant supply could encourage ill-advised investments – investments that create stranded cost burdens and delay progress toward a least-cost and least-risk low-carbon future. A gas-fired fleet should complement other low-carbon resources – not eclipse them. To that end, we need a “smart gas” approach – one that maximizes the use of low-cost, low-risk resources, such as energy efficiency and renewable energy.
This article, originally published in Public Utilities Fortnightly in July 2015, describes a risk-aware approach to natural gas infrastructure, which considers the costs and risks of all complementary resources. Dr. Linvill recommends five steps to make electric system needs transparent so that the compensation provided through markets and tariffs is aligned with the value of meeting long-term system needs. These include building an intelligent grid, making needs transparent, including all resources, implementing clean-first dispatch, and improved permitting.