Energy Reliability Means Natural Gas-Electric Coordination
Dan Lapato is Vice President of Planning at the American Gas Association. He has worked in the energy field for 17 years and was involved in permitting the first Marcellus shale well during his time in the Pennsylvania state government.
America’s energy system changed the day it drilled the world’s first commercially viable shale well, unlocking more than a century’s worth of natural gas for our country. Once that well proved out, the acceleration could be felt in real time. It went from a policy conversation to an all-of-the-above energy reality almost overnight.
The ramifications were profound, with natural gas rapidly surging to become America’s predominant energy source. Consequently, the way America once planned its energy system, as if natural gas and electric are two separate worlds, is no longer viable. They are increasingly connected system, and policies need to catch up.
People often think “gas-electric coordination” means dispatch and fuel scheduling for power plants. That matters, but it is not the end of the story. The key also lies in coordination around planning and infrastructure investment. The energy industry is investing heavily in both natural gas and electric assets. To continue meeting the reliability and affordability expectations that customers live with every day, it is no longer viable to plan both systems in independent vacuums.
Natural gas already underpins that reality for so many families and businesses. More than 189 million Americans and 5.8 million businesses rely on natural gas. And households that use natural gas for heating, cooking and clothes drying save an average of $1,030 per year compared to homes using electricity for those same applications. That is money back in family budgets, year after year.
Reliability is nonnegotiable, and grid planning must change to continue to advance this reliability. The industry has moved away from the era of a few massive, centralized plants and toward smaller, more nimble resources. At the same time, behind-the-meter generation is rising. That prominently includes natural gas backup generation for homes, hospitals and critical infrastructure.
As those resources grow, peak demand can shift. Natural gas utilities have traditionally planned around winter peaks in many regions. However, in recent years natural gas utilities have also begun planning for the hottest day of the year, when the electric grid will rely most heavily on natural gas to power generation. The economics of resilience are compelling. Hotels in urban metro centers, take New York City for example, can lose hundreds of thousands of dollars, or in some cases in the range of a million, in revenue for every day they are without power. The upfront expense of technology to help ensure the reliability customers expect, for example a rooftop natural gas generator, can easily pay for themselves to avoid outages down the line.
Markets are leaning into this trend. In ISO New England, demand response and related programs compensate participants for reducing load when dispatched, and on-site resources can play a role in meeting those needs. The grid is sending a signal: flexible capacity is valuable.
Coordination is also about confidence. America’s natural gas utilities invest $37 billion each year to enhance the safety of natural gas distribution and transmission systems and have reduced emissions by 70% since 1990 as a result.
If policymakers want to help everyday Americans, the priority should be practical: recognize the integration across our energy system, modernize existing infrastructure, and remove barriers to building needed projects. The energy sector needs every tool available to keep energy affordable, fuel families and businesses and keep critical services running when conditions are at their worst. Natural gas is central to that outcome, and smart natural gas-electric coordination is key to improving the overall system.