Wednesday, November 30, 2011

Shale Gas Is Not Stopping Renewable Energy Boom

I often hear both that the shale gas industry is fraudulent or a ponzi scheme and that it is so inexpensive, big and ubiquitous that it will kill renewable energy.

In fact, the shale gas boom is real and has coincided with a renewable energy boom that is growing in the USA and around the world.  Consider these recent facts:

1. Global investment in renewable energy power plants exceeded investment in fossil fuel power plants during 2010 ($187 billion to $157 billion according to Bloomberg New Energy Finance).

2. The International Energy Agency's 2011 Annual Report projects a global tripling of renewable energy  from 2008 to 2035.

3. The North American Electricity Reliability Council's 2011 Long-Term Reliability Assessment released just last week projects that renewables will provide 50% of the expected new generation over the next 10 years. Nearly all the rest will be gas, according to NERC. More on this in an upcoming blog posting.

4. US wind generation capacity will double between 2008 to 2011, increasing from about 25,000 to 50,000 megawatts.

5. US solar capacity will have increased 8-times from 2008-2011, rising from about 500 megawatts to 4,000 megawatts.

Just as renewables boomed, the shale gas revolution began in 2000, took off in 2007, and now accounts for about 30% of total US gas production. Did one cause the other? No.  Did one stop the other?  Also, no.

Both the IEA and the NERC 2011 Reports confirm that the next 10 to 25 years will see both renewables and gas continue to boom.  Will there be ups and downs for renewables?  Better and worse years for renewables?  Of course.  Will individual companies such as Solyndra fail? Absolutely.

Does state, federal, and global policy impact the growth of renewables and improvements in the technologies? For sure. Global public and private investment is pouring into renewables and that investment has already both grown substantially renewable production and improved renewables' competitiveness. 

The Chinese plunge into solar, for example, has been the single, biggest factor in dropping solar prices a great deal around the world. The falling price of solar is now inexorable and will hit the equivalent of $2 per watt installed by around 2016.

Are current soft US demand for electricity and low-electricity prices bullish factors for any sort of new generation, including renewables and gas? No.  But gas and renewables are uniquely positioned to grow, even in this environment. Moreover, as intermittent renewables grow to be more than 5% of regional grids, they need natural gas turbines that are ideal for firming electricity supplies. In this important respect, renewables and natural gas are partners.

Renewables are prospering and will continue to do so, because they are the cleanest source of energy, often the easiest to build, and because their costs are falling, while their productivity is increasing. New wind in the USA in good locations is right now as low-cost as a new gas plant. Increasingly sound economics is the strong foundation of the global renewable energy boom.

2 comments:

  1. Good analysis, John. The other point that bears repeating is that Chinese demand for thermal coal also catalyzes growth of both renewables and gas by driving up global thermal coal prices. That allows low- and no-carbon generation sources to compete with thermal coal domestically on cost alone without even considering the relative environmental benefits.

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  2. Concerned ScientistNovember 30, 2011 at 9:24 AM

    I do hear this a lot and make the same points you do - I think I got some of the points from you actually. The data suggests that cheap gas is not slowing down renewables at all. Perhaps the best argument is that gas is the perfect complement to wind and solar. It is much easier to increase and decrease the amount of energy created at a gas plant than at a coal or nuclear plant so it works well with intermittent energy sources. Plus it is a quick way to reduce GHGs and other pollution while the renewables grow. How shale gas became "the worst thing that ever happened to us" from an environmental perspective is quite perplexing.

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