Over the last 15 years natural gas has benefited from rapid growth in its use as a fuel in power generation. This has been true across the U.S. and particularly on the Eastern Seaboard from the Carolinas north to Maine. During this time, phenomenal growth in gas use has been driven by reduced prices coupled with demand for greater energy diversity and cleaner generation options. From 2003 to 2017, gas use in power generation increased by 95% and 148% in the U.S. and the East Coast respectively. While the last decade has belonged to gas, in this post we look at why the East Coast power generation future will be about renewables – specifically offshore wind.
East Coast Electricity Generation and Load. One first needs to understand the existing electricity generation and load portfolios of East Coast states and how they have trended over the last few years. We used 2000-2017 data from the U.S. Energy Information Administration. By ‘East Coast’, we mean all the States from South Carolina to Maine: specifically – South Carolina, North Carolina, Virginia, Maryland, Washington DC (OK – a federal district and not a state), Delaware, New Jersey, New York, Connecticut, Rhode Island, Massachusetts, New Hampshire and Maine. In 2017, these 13 states consumed 734,032 GWh of electricity or 20% of the 2017 U.S. total of 3,680,000 GWh. In other words they represent a large part of the entire national electricity market.
This chart shows electricity demand has been essentially flat for the East Coast states for the last 17 years. That in itself is pretty remarkable particularly given the population growth which has taken place over the period. The other striking feature is the yellow line – average greenhouse gas (GHG) emissions per unit of generation. In 2001, they were 462 kilograms per megawatt hour of generation (kg/MWh) but have since fallen 30% to 304 kg/MWh in 2015: the most recent year for which state-specific GHG data is available from the Energy Information Administration. This 2015 GHG emission factor is considerably less than the current U.S. average for the power generation sector: 438 kg/MWh.
Trends in Electricity Generation by Type. Here we show the change in the electricity generation mix since 2001.
The main point of note – which needs little by way of explanation – is the massive shift over the last 17 years from coal to natural gas. There is little else that stands out apart from a decline in petroleum/heavy fuel oil powered generation. The use of wind has hardly changed although solar, in just the last couple of years, has experienced strong growth.
2017 Electricity Generation by Type. The last of the three charts focuses on 2017 to show how electricity is currently generated,
The chart shows a region with a generation portfolio approximately split into thirds: on third nuclear, one third gas and a third ‘other’.
- Gas increases average emissions. The most striking conclusion from this analysis is that GHG emissions from East Coast electricity generation (304 kg/MWh as noted in the first chart) are already significantly less than those from a new gas-fired power station (about 390 kg/MWh – not including the global warming potential associated with any methane leakage). The implication is therefore that adding new gas-fired power stations will increase regional emissions. This obviously does not hold true for all states: for instance North and South Carolina still burn a significant amount of coal and replacing it with gas will reduce average emissions. However, for most of the remainder, adding more gas will serve only to increase average emissions because the the use of gas will tend to displace zero emission generators such as hydro, wind, solar biomass or, to a lesser extent, nuclear. This is particularly true in New Jersey, New York and Massachusetts where all generation, except for gas, is zero emission.
- Gas reduces energy diversity. Energy planners aim for a generation portfolio which balances cost, energy diversity and environmental impacts. Typically such a portfolio will not rely on a single source of generation for more than about a third of total generation. Using this as a broad metric, it is apparent that over the last 10 years, as gas has risen from 15% of regional generation to a third in 2015, it has contributed to increased energy security as it has reduced average GHG emissions and has also diversified the region’s electricity generation away from excessive dependence on coal. However since 2015 the advantage of gas has been less clear from an energy diversity perspective and this may explain why the steady pattern of growth has been interrupted. Regional gas use declined over the 2016-2017 period.
- A Golden Age of Renewables? Coal still generates more than 10% of regional electricity and, for various reasons which we do not need to list here, there is considerable political pressure – at a state if not a federal level – to reduce this amount. It does not make sense to replace that lost capacity with nuclear due mainly to cost challenges which the industry has yet to solve. It also does not make too much sense to replace it with more gas – since doing so would, as noted, increase GHG emissions and reduce energy security. Renewable energy, excluding large hydro, currently makes-up only 6% of regional generation. The rapidly declining price of offshore wind (and solar) means there is therefore good sense to increasing both of these in the generation portfolio. And this explains why there is already a pipeline of 8 gigawatts (GW) of offshore wind which is expected to be built and operating by 2030. Most of this new offshore wind capacity will be concentrated in New Jersey, New York and Massachusetts. Just to put things into perspective: if offshore wind was generating 15% of regional electricity consumption (734,000 GWh in 2017) – and there is no technical or economic reason why it should not – then it would require 25 GW of offshore wind.
The last fifteen years was undeniably the Golden Age of Gas but that period is drawing to a close. The next 15 years is shaping up to be the Golden Age of Offshore Wind.
Long may it last!