Natural gas seen playing complementary role as renewables tech develops
BARCELONA — Even as renewables continue to grow, the global gas industry is confident natural gas still has a key role to play in the energy sector.
At the same time, top industry executives are also pushing back at criticism that natural gas is hindering the growth of renewable energy sources.
“For the power sector, we see natural gas as the best complement for intermittent renewable energy and obviously, the best substitute for polluting energy which is essentially oil, diesel or coal,” Engie Executive Vice-President Pierre Chareyre said during a panel discussion at last week’s Gastech Exhibition and Conference here.
Marcelino Oreja, chief executive of Spanish giant Enagas, said gas is not just a “good back-up” for renewables, but is also needed to support the growth of industry.
“For many people who don’t know about gas, they think gas is stopping the growth of renewables and that’s what makes people very against us. Many of the infrastructure we are building, promoting in Europe, there are demonstrations because people think we are stopping the growth of renewables,” Mr. Oreja noted during the same panel.
While some say that renewables will soon overtake the need for natural gas, particularly in the power generation sector, Black & Veatch Chairman and CEO Steven L. Edwards is positive that natural gas still has a role to play in the future.
“We are confident that natural gas has a role, even as renewables reshape the electricity industry… I’m a strong proponent of natural gas complementing renewables. I believe renewables will increase greatly around the world but at different paces,” he said.
Engie’s Mr. Chareyre says gas is the “best friend” of renewables. “Only combination of natural gas and electricity solution can keep energy transition costs at a socially acceptable level because most of the investments in gas infrastructure has already been done. It will be able to cope with challenge of energy transition in a clean and effective way,” he added.
TRENDS
Black & Veatch’s Mr. Edwards said the industry needs to pay close attention to three trends to determine the role natural gas will play in the future.
“First is the cost of renewables that will continue to decrease at a rapid rate. That’s a long established trend at this point… Costs are decreasing which indicate renewables will continue to capture a greater share of the market,” he said.
One trend to watch is how innovations in battery storage will have an effect on the electricity grid.
“Those technologies are new, not very cost-competitive without government subsidies to move those forward.
But there are huge amounts of investment pouring into storage right now and… the timing of when storage will help address intermittency of renewables, in our view… will take decades,” Mr. Edwards said.
Another trend is the rapid growth of electrification due to electric vehicles, which Mr. Edwards said provides opportunity for both renewables and natural gas.
“As we transition from fuel to electric vehicles, we believe the solution means there will be more power needed from the grid, and both sources will play a significant role in filling the gap. The biggest challenge in renewables is the stability of the grid and intermittency of those sources,” he said.
For Mr. Edwards, what is important is for the natural gas industry to find ways to innovate to keep pace with innovations in the renewable energy sector.
“As the prices come down, natural gas will need to stay on a curve to innovate and competitive with renewables,” he said.
OPPORTUNITIES
Meanwhile, the gas industry is seeing opportunities for future growth, particularly in the transportation sector.
“We think natural gas will increase and grow in the use for transportation. In Spain, we are behind the use of natural gas for vehicles and we are pushing that through Enagas and investing in gas stations,” Mr. Oreja said.
Astrid Alvarez, CEO of Grupo Energia Bogota, said it is important for emerging countries like Colombia and Peru (where the company operates) to use of gas for the mass transportation sector.
“There are challenges and opportunities, especially in our cities, where the newest vehicles pay more taxes than the oldest ones. It’s very strange but we should change the policies. Cities should have lowest taxes for the gas vehicles, so it will give you an incentive to use a gas vehicles. In Colombia and Peru, we want to have policy that will increase gas-powered mass transportation, buses, taxes and small vehicles for logistics,” Ms. Alvarez said.
Engie’s Mr. Chareyre said his view of the future of transport systems in Western Europe is based on a mix of fuels and electricity.
“We think gas is an essential solution for heavy vehicles like buses and trucks. In that field there are not so many substitutes… In Paris, for the local transport system… there will be a fleet of buses running on biogas with dedicated fueling stations. That means the bus system will be fully clean in France by 2025,” he said.
Engie is also working on liquefied natural gas (LNG) for bunkering. “We think the maritime industry is going into that direction. We see LNG as the cleanest fuel for shipping and cargo. We think natural gas and LNG and biomass will play an important role in the future for decarbonizing and cleaning transportation,” Mr. Chareyre said.