The 21st-century grid is transforming faster than anyone imagined ten years ago, when natural gas seemed to be our power source of the future. Today, with ever-dropping prices in renewables and storage, the future is being re-defined.
A decade ago, the advent of horizontal drilling made natural gas the darling of the U.S. power sector, and for many good reasons. Natural gas lends itself to providing both steady baseload and easily dispatchable peak load power. Inexpensive, domestically produced and significantly lower in emissions than coal, natural gas was lauded as an abundant, cost-effective vehicle for enabling the lengthy transition to a renewables future that the domestic power sector faced. However, it now appears that the transition is happening much sooner than anticipated. As the deployment of renewables plus energy storage accelerates exponentially across the country, utilities are recognizing the proven ability of storage resources to supplement and, in some cases, completely replace gas-fired generation.
Stiff Competition from Renewables and Storage
In North America, natural gas is no longer necessarily the most cost-effective nor lowest-carbon energy resource to deploy. While gas will remain an important fuel source for a diverse generation base for years to come, it is facing competition. In early 2017, for example, for the first time in history, low-cost, clean electricity from Midwest-based wind turbines supplied over 50% of all power to the grid across 14 states in the central United States, from Montana to Texas. Utility-scale solar prices in the U.S. have fallen 73% since 2010, with average prices (not including subsidies or tax credits) at $45/MWh – and as low as $23/MWh in solar-rich southwestern states. Mexico’s 2017 solar auction resulted in the lowest price seen the world has seen to date: $19.18/MWh. Globally, the International Renewable Energy Agency (IRENA) has stated that renewable energy technologies should be competitive on price with fossil fuels by 2020.
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