When temperatures in Minneapolis fell to 27 below zero during the January 2019 polar vortex, the Xcel Energy utility urged all Minnesota customers to lower their thermostats to conserve natural gas needed for power generation. In Michigan, where it was also colder than the North Pole, General Motors even shut several factories as a precaution against outages.
As a engineering economist who studies electricity markets and fuel supply chains, I look for ways to maintain energy delivery despite increasingly uncertain and extreme weather. I also edit an academic journal devoted to analyzing the costs, benefits and risks of capital investment. Based on what I’ve seen, making electrical generation more flexible while increasing access to stored gas would be the best way to help keep the lights on without sacrificing warmth when cold snaps strike.
More power from gas
The 2019 gas shortfall was only the most recent in a string of similar situations. Earlier polar vortexes in 2013 and 2014 hit New England especially hard. The “bomb cyclone” that struck the East Coast in the winter of 2018 strained supplies, making gas prices soar.
It’s not just that bouts of extreme weather are becoming worse and more common, even though they are. The electricity grid is increasingly relying on natural gas.
Many of the older coal-fired generators being retired are being replaced by gas-fired ones and renewable sources like wind and solar energy. The share of electricity powered by natural gas rose to 32 percent in 2017 from 18 percent in 1990, as the share from coal fell to 30 percent from 76 percent in the same time period.
Natural gas costs much less than it used to, and gas-fired generators are more flexible. It is far easier to turn gas-fired power plants on and off, for example, than nuclear reactors. What’s more, natural gas plants can ramp production up or down quickly to smooth out the inevitable variability in electricity generation from wind turbines and solar panels – when the sun isn’t shining and the wind isn’t blowing.
As renewable energy accounts for bigger shares of electricity generation, power production from gas is projected to keep growing, too.
No easy substitute
Most gas heats homes and commercial properties and fuels the manufacturing of everything from newsprint to aluminum and canned tuna. Following years of growth, electricity generation still consumes only about a third of all gas usage in the United States.
And, while utilities have different choices they can make, there is no easy or immediate way to find a substitute for its other uses – especially if they want a relatively clean source. Heating systems take a long time and a lot of money to convert for homeowners, and it’s even harder for manufacturers.
To avoid service disruptions, most large industrial and commercial users, as well as local gas companies, establish firm contracts that guarantee delivery of the gas they anticipate needing.