The table below is from an interesting analysis published by the EIA this week that focuses on possible power demand scenarios for the US – all weather-related – and then backs into the power sources that would be needed to meet the demand, concluding with the US carbon emissions that would correspond to each scenario. The conclusions should not be surprising, which are that carbon emissions rise disproportionately faster as power demand rises – as more coal is required to balance generation needs, and fall disproportionately more quickly as power demand falls (as less coal is needed). The analysis is effectively a study of how much less CO2 emissions are using natural gas to generate power versus coal. As renewable generation increases as a share of the total, however, the math will change, and the EIA study does not take into account the weather factor on renewable power, it looks at cooling degree days and heating degree days at a national level only. This is reasonable as there is likely not enough data to be able to put good reliability estimates yet around renewable power annual volatility and more importantly, the impact of weather on renewable power is likely to be short-term in nature. Perhaps this analysis could be improved by adding a “daily risk band” around each scenario, showing how much renewable power volatility could cause peaks in the high scenario and lows in the low, etc.
Source: EIA, July 2021
As the renewable power portion of the power supply grows in the US and the rest of the world, all of the social and economic risks come from how we handle the peaks (or weather anomalies that cut supply – such as the freeze in Texas) and how often they occur. Blackouts happen, but if they are too frequent and prolonged there will be significant fallout. Regardless of the focus on decarbonizing the power industry – something we will cover in detail in our recently launched Carbon Abatement Study – grid reliability and an ability to handle peaks in demand will become more important as the proportion of renewable-based power rises. Consequently, we believe that it is a fool’s errand to try and replace natural gas-based generating capacity en masse, whether it is in the US or globally, and that significant natural gas-based power will be needed for the long term, requiring alternate paths to carbon abatement. How much natural gas-based generation makes sense and the more logical options for carbon abatement will be central to the study linked above.
