Old Flame: The End of Natural Gas?

Natural gas – “the bridge fuel” to a renewable world, we’ve been told.
That was a lot more true in 1985 than it is now.

5 years ago big energy manufacturers were fighting over natural gas turf. Now they are fleeing in disarray.

Outlines not yet completely clear, but there are suggestions that Natural gas could be going the way of coal sooner than any one thought.

Green Tech Media:

Amidst the madness of 2017, a bigger shift was missed than probably any other — right at the commanding heights of the economy: Natural gas fizzled out of the plan for the future.

That’s major.

Natural gas is no longer a contender or pretender, just a relic of the past, likely to fall as far and as fast as Old King Coal, and maybe faster. This has repercussions for the economy of many states and nations, and the politics of the transition in terms of what we ask for and what we will get.

Here’s what I’m thinking:

The big signal that got some coverage in the pink pages (FT) and energy-wonk trade press in November was the closure of Siemens and GE’s gas turbine-making capacities. Just to recap for those that missed it, first Siemens, the giant European champion of the electric power revolution, laid off 7,000 workers. It reported that it had a capacity to make 400 100MW gas turbines annually but only had received orders for 110 in 2017. Ouch. Retrain!

And then GE: Two weeks later, it laid off 20,000 workers in its gas-related business, including turbine-making teams around the world. Remember, just about five years ago Siemens and GE battled for the gas business of Alstom, the French descendent of the same companies GE came out of in the early 20th century. GE paid $10 billion for it and declared a coup.

But now, they’re writing it off. Their strategic choices under Jeff Immelt are being questioned by the market: while the Dow is up about 30 percent over the past 12 months, GE’s stock is down about 45 percent. (Indeed, GE won the “honor” of being the Dow Jones Industrials worst-performing stock of 2017.)

Not just GE and Siemens.

Nikkei Asian Review:

TOKYO — The dawn of renewable energy is starting to pinch at companies that build fossil-fuel-fired power plants, forcing substantial layoffs at manufacturers such as Japan’s Mitsubishi Hitachi Power Systems.

Under the Paris climate accord, which took effect in November 2016, developed and developing countries alike have pledged to limit greenhouse gas emissions over the coming decades. This has spurred a broad shift toward power production that eschews fossil fuels, both as a matter of national strategy and in terms of corporate investment.
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In light of this funding crunch, around 80% of plans for new coal-fired power plants in India — 533 gigawatts in all — have been halted or canceled. “The costs of fossil-fuel power generation will rise even further as funding dries up and environmental regulations grow stricter,” said Kentaro Tamura, research leader at the Institute for Global Environmental Strategies. “There isn’t just going to be a temporary pause in demand.”

All the while, renewable energy has exploded. Global investment in renewable electricity generation totaled $297 billion in 2016, while that in thermal power generation came to just $143 billion, according to the International Energy Agency. In 15 leading European nations, renewables accounted for 34% of all electricity produced in that year. Wind and solar power are already more cost competitive than thermal facilities in some cases, and will only grow more so as adoption spreads.

Vox:

But the extraordinary progress of renewables in the past two decades has moved that hoped-for future closer and closer. And now, unbelievably, it is right on our doorstep.

It’s one thing for advocates or energy analysts to say that, of course. It’s something else to hear it coming out of the mouths of energy executives. But these days, residents of the C-suite are discussing renewable energy in terms that would have made hippies blush a decade ago.

The latest is Jim Robo, CEO of NextEra Energy, a giant energy company with subsidiariesthat include Florida Power & Light (America’s third-largest utility, with 4.8 million customers) and NextEra Energy Resources, which boasts of being “the world’s largest generator of renewable energy from the wind and sun.”

On a Q4 earnings conference call on Friday, Robo predicted that by the early 2020s, it will be cheaper to build new renewables than to continue running existing coal and nuclear plants. That’s … crazy.

This wasn’t some aspirational post on the company blog, either; it was a call with investors, to whom Robo is legally beholden. And it comes on the heels of other mind-boggling news from the utility sector, like a solicitation for energy bids in Colorado that turned up renewables+storage projects that will come within striking distance of existing coal plants by the early 2020s.

First, the headline numbers. Here are the costs Robo anticipates “early in the next decade”:

• Unsubsidized new wind: 2.0-2.5 cents per kilowatt-hour
• Unsubsidized new solar: 3.0-4.0 cents per kilowatt-hour
• Variable operating costs of existing coal or nuclear plants: 3.5-5.0 cents per kilowatt-hour

If those predictions hold up, it is game over for coal (and nuclear, unless it gets support based on its low carbon emissions, as in New York). No one will ever build another coal plant in America, and the ones still running would likely shut down sooner than scheduled.

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Second, ongoing declines in the cost of renewables ensure that they will remain competitive even as subsidies fade out. Wind turbines are getting taller, their blades wider, the intelligence that calibrates them more sophisticated — even as they’re getting cheaper. “Over the past year, we’ve seen an approximate 30 percent reduction in turbine costs,” Robo said. “Through the end of the decade, we expect another 10 percent decline per year on average.”

NextEra thinks it will mostly avoid damage from Trump’s recent solar tariff. Most of its panels through 2020 are already purchased or contracted, and “we expect that by 2020, as the tariff steps down, the market will have adjusted to these new dynamics.”

A final intriguing note: Robo says the company is hard at work on combining renewables with storage. “We recently submitted a bid at a very competitive price for a combined wind, solar, and battery storage product,” he said, “that is able to provide an around-the-clock, nearly firm, shaped product specifically designed to meet the customers’ needs.”

Power Engineering:

General Electric’s management has warned that its beleaguered GE Power division will continue to encounter difficulties in the coming year, as the impact of the clean energy revolution persists.
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General Electric’s management has warned that its beleaguered GE Power division will continue to encounter difficulties in the coming year, as the impact of the clean energy revolution persists.
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GE also has presence in the renewable energy area, but the outlook there is challenging too. While GE is shipping more megawatts worth of wind turbines, it faces pressure to lower prices.