The Chairman of the Federal Energy Regulatory Commission, Jon Wellinghoff, recently made news by suggesting that there may never be a need for a new nuclear or coal power plant to be built in the U.S. Chairman Wellinghoff envisions a future in which renewable resources such as wind, solar, and hydrokinetics are backed-up by natural gas-fired generation — central and distributed facilities — which will provide load-response services. If this potential were fully realized, coal and nuclear could theoretically be priced out of the market, potentially making baseload generating capacity a thing of the past. A robust electric transmission system, demand response programs — “smart” grid — and increased energy efficiency would be an important part of the picture. Chairman Wellinghoff raises a very important point regarding the economics that support this vision — expectations of ever-higher construction costs and increased siting challenges associated with new coal and nuclear plants are changing thinking about the relative cost equation comparing traditional central generation plant and distributed resources — renewable or other. This shift in thinking on the part of leading policymakers is representative of the sea change that is occurring in thinking about how and where we produce energy.
Natural gas will play an important role in enabling this “smart” vision whether through traditional uses in space and water heating, or in the production of electricity inside of or nearer to homes and businesses. As part of the state-wide New Jersey Clean Energy Program, natural gas utilities in that state administer Pay for Performance, which provides incentives of up to $1 million to industrial and commercial customers for purchasing and installing Combined Heat and Power (CHP) units. This emerging technology is expected to become increasingly prevalent as an innovative way to enhance energy efficiency through recovery and productive use of waste heat, thus reducing both demand on the electric power grid and carbon dioxide emissions. And although it’s not yet ready for the mass market, even micro CHP (the smaller version designed for residential use) is beginning to earn some attention.
In short, Chairman Wellinghoff is definitely on to something “smart” and natural gas will be key to his vision becoming a reality.