The Natural Gas Revolution: Good or Bad for Energy Efficiency?

If there were an equivalent in the energy industry to Time Magazine’s Person of the Year, natural gas would be this year’s winner.

The dramatic rise in natural gas supply, and fall in price, has reconfigured the energy scene in the United States, suddenly creating a bounty of domestic energy, driving down wholesale power prices and speeding retirement of polluting coal-fired plants.

Veteran energy insiders have told me in recent interviews that they never expected in their lifetime to see this kind of rapid market shift.

So what does the natural gas bonanza mean to energy efficiency — another resource creating surprising changes in the electric grid?

Typically, when energy gets cheap consumers stop thinking about efficiency. But the American Council for an Energy-Efficient Economy sees a different scenario emerging this time, according to two reports released by the Washington, DC-based organization in September.

First, it’s important to note that energy efficiency is not just something done in the household or office. It’s managed on a large scale by utilities and grid planners and often now competes head-to-head with power plants as a means to keep the lights on. So when an area of the country needs more power, it might build a new gas-fired power plant, install wind turbines or solar, or some other kind of power generator. Or it might inject more energy efficiency into the system by way of energy saving technologies, programs or incentives.

Many factors go into deciding which will be selected, but price ranks high. And despite the fall in natural gas prices, energy efficiency remains the lowest cost resource on the electric grid — it’s still cheaper to save energy than to build new power plants, according to the ACEEE white paper “Saving Money and Reducing Risk: How Energy Efficiency Enhances the Benefits of the Natural Gas Boom.”

Natural gas and energy efficiency tend to be in competition with each other – because they are the cheapest resources — but the two also can foster each other, according to the white paper.

Here’s why.

Historically natural gas has been prone to sudden supply disruptions and price spikes. ACEEE quotes Jim Rogers, chairman, president and CEO of Duke Energy famously saying: “There are three things in life you can depend on: death, taxes and the volatility of natural gas markets.”

The sudden price spikes wreak economic havoc for homeowners who heat with natural gas, as well as manufacturers that use it in industrial processes, and utilities that generate electricity with it.

But energy efficiency helps smooth the sudden peaks and valleys of natural gas pricing. Energy efficiency reduces demand for natural gas and therefore elongates its supply, says ACEEE. In fact, energy efficiency could reduce energy demand 42 to 59 percent by 2050, according to a separate ACEEE study.

That’s one way the marriage of natural gas and energy efficiency work.

Another involves combined heat and power plants, which are highly efficient generating plants that recycle the waste heat created in power production for useful purposes. Also known as CHP, it is considered an underutilized resource in the US and is often championed by energy efficiency advocates.

President Barack Obama recently set a goal to increase CHP use about 50 percent by 2020. Low natural gas prices should help achieve this goal, since many CHP plants — more than half installed since 1990 — use natural gas as fuel. Cheap natural gas makes CHP more economical.

ACEEE sees CHP plants as good replacement for the large number of coal-fired plants now retiring. In fact, the organization says that CHP could replace all of the retiring plants at a highly competitive cost, about 6 cents/kWh. By comparison a new conventional power plant cost 6.9 cents/kWh to 11.3 cents/kWh.

“Our report suggests that instead of investing in new centralized power plants, utilities should invest in new CHP plants to keep costs down for their customers and generate much cleaner electricity,” said Anna Chittum, the report’s lead author. “Utilities around the country have expressed concern about the amount of coal-fired capacity they believe they will need to retire in the near future. Many are asking for substantial increases in customer rates to pay for new investments in traditional power plants when they could be investing in CHP instead.”

The two ACEEE reports can be found here.

Elisa Wood is a long-time energy writer. Subscribe to her free newsletter at RealEnergyWriters.com.

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Pink Green: how to ignite the second electric revolution

The electronics industry is to build good things. This is how it solves problems. Is there a danger of blackouts? Develop a new natural gas-fired plant. Concerned about climate change? Wind and solar to build. Does electricity cost too much? How to install a transmission line import cheaper makes.

But build-solution provides only half of the equation in the new world of the smart grid. The other half, the part that is to solve-without building the industry, stumps.

Tried smart-grid rather than add more power, maximum efficiency of the system by changing the way we consume electricity to rings.  But it turns out, try to direct human energy makes cat behavior look easy drive. Pay attention to people of their energy consumption experiment utilities and private companies with tantalizing gadgets and social motivations.  So far, success is minimal.  Thomas Edison's light bulb is want none of us for the last 100 years so a complete success, to turn it off.

So what will it take?

Pink, best-selling author of the Edison Foundation saw recently outside the industry for some answers, inviting Dan of "drive: the surprising truth about what motivates us" last month makes people speak 2.0 Conference in Washington, D.C.

Consumer motivation has become a common Conference theme. But pink presentation was different. He resigned and took a broader view and asked: how we motivate people who try to motivate the consumers? Pink calls this "Science like people do extraordinary things."

Energy creative thinkers need to ignite the "second electric revolution", Rosa bust of their intellectual silos. But smart grid a particularly difficult problem for them is because the industry is trying to invent devices, not ask consumers.  The grid needs to use the gadgets and consumer.  But consumers would think rather you to their next iTunes download, or where to buy the tastiest strawberries. How to get want consumers a smart plug or only so much energy display home?  Some in the industry say that smart-grid is doomed to fail, because it need not demand of private households, but the energy industry is born.

Pink has a different view. He asked the audience to raise their hands if they have an iPad. Half have. Then, he asked how many of them knew that she needed one two years ago. Only a hand went.

Apple's genius lines in it; his ability, which give it not knowing world lacked. Can the energy industry with smart grid? It must first recognize that this is more likely to find a skill in artists as engineers. "I think that the cognitive skills of the artist are today the most important cognitive skills in the economy," said Rosa. "We need scientists who think like artists and artists who think like scientists."

Also have the electrical industry to rethink the kind and way creative employees. "It turns out much of our intuition about motivation are not quite right," according to pink. In fact, it is downright "Newtonian" to assume that "If you reward a behavior, you get more of it, and if you punish behavior less thereof."

So, forget the great bonus for the ingenious idea.  While people must be paid reasonably well, great bonuses motivate only them, short-term goals, how the amount of quota to achieve. "Igniting the second electric revolution is not easy, is not in the short term, but is complex and in the long term", he said.

So, it gets what creative thinkers move? Leisure, such as Rosa it tells. He cited studies and examples of artists who reach their best work without a Commission and inventor working Nobel front of the clock.  The economy starts to catch on this idea, and some offer a regular day as their inventors and encourages problem-solver will stop their required tasks and work only on something that interests them. Many of these free hours have produced some amazing results, were able to reach the company otherwise.

"Complex industries, such as the complex ecosystems require their, this kind of complex, silo-busting thinking." You will it not by an elaborate system of incentives, but by adjusting of talented employees and getting out of the way to get, "he said."

Perhaps, if Rosa is true, and the electrical industry is monitored, he'll be able ask public in a few years as have many device some amazing energy-saving, which has designed yet nobody, and fly many hands in the air. Maybe then will the light bulb as we know it, eventually to be replaced.

ELISA is a long-time energy writer, whose working can be found at RealEnergyWriters.com

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