Natural Gas and it’s Impact on
Energy Markets
Natural Gas and it’s Impact on Energy Markets
Natural gas is the single largest commodity driver impacting energy prices. As the US moves away from more polluting fossil fuels natural gas has proven to be a cleaner, more accessible, cost effective and easily dispatchable fuel. In addition to environmental benefits, the US has an abundance of domestic natural gas which lessens our dependence on foreign resources. When we describe a fuel as dispatchable we are talking about how easily a fuel can be turned into power and how easily the output can be adjusted.
Environmental
Domestic Production
Reserves
Cost
Average Power Plant Operating Expenses for Major US Investor-Owned Electric Utilities 2022 – Operation without Maintenance
Nuclear $10.51/MWh
Fossil Steam $6.75 /MWh
Hydro-Electric $7.68/MWh
Gas Turbine and Small Scale $2.20/MWh
Dispatchability
As the world becomes more dependent on renewable energy we find ourselves relying on electric generation that is inconsistent in production and difficult to forecast. To fill the gaps when wind and solar under-perform utilities are having to fall back on other energy sources. Below is a list of highly dispatchable fuels – meaning generating capacity that can easily be brough online in times of generating scarcity.
Hydroelectric dispatchable in less than a minute but limited to certain geographical regions
Battery Storage dispatchable in less than a second, extremely short lasting, highly limited capacity
Natural Gas dispatchable in less than an hour, long lasting, easily ramped up or down
Other traditional power sources such as coal, biomass and nuclear can take days to dispatch.
As we shift from fossil fuels to unpredictable renewables, at very least, natural gas will continue to fill in the gaps.