By James McGovern
If ever there was a question about how risky heavy dependence on natural gas for electricity production is, it was dispelled with results of a newly completed study showing that gas prices could more than double in less than a decade.
Because natural gas accounts for nearly 40 percent of New Jersey’s electricity generation — and its share is increasing — higher prices could drain household budgets while eroding the competitiveness of our manufacturing industries.
The study by the engineering and construction company Black & Veatch found that industries expect gas prices to climb through 2020, driven by rising demand for electric power generation, natural gas vehicles, petrochemicals, manufacturing operations and exports of liquefied natural gas (LNG). It said natural gas prices nationally are likely to rise from the current level of less than $3.50 per million BTUs to as much as $7.49.
It is ironic, and troubling, that this threat to the economy is being quantified at a time when the Obama administration’s energy policies seem designed to make electricity production from coal and nuclear power less affordable. The Environmental Protection Agency is proposing greenhouse gas restrictions on power plants that no currently operating coal plant can meet. And the administration has halted construction of a deep-geologic repository for nuclear waste at Yucca Mountain in Nevada.
One has only to recall that natural gas prices just four years ago topped $13 per million BTUs, almost four times today’s gas price. Surging production of shale gas is enabling producers to meet increased demand for natural gas, but gas production could taper off if more stringent restrictions are placed on natural gas drilling, especially fracking for gas in the Marcellus shale.
Nationally, we need to recognize the economic and environmental value of maintaining a balanced mix of energy sources. If not for the reliability of emission-free nuclear power plants, we would need to burn far greater quantities of fossil fuels.
For example, in the first six months of 2012, New Jersey’s nuclear power plants produced electricity 86 percent of the time, among the highest capacity factor for any power plants in the United States. By contrast, combined-cycle natural gas plants have average capacity factors of 55.5 percent, while wind turbines have capacity factors of 31.3 percent, and solar, 27.1 percent, according to the Energy Information Administration.
Meanwhile, rising demand for electricity underscores the need for more baseload power from nuclear plants. Even modest U.S. growth in electricity demand of less than 2 percent annually will soon outstrip the additional power to come from plants under construction.
Though the cost of building a large new nuclear plant is higher than a natural gas plant, once a plant is up and running, the production of nuclear-generated electricity over a plant’s lifetime is less, because fuel for a nuclear plant is much cheaper than natural gas. This is why the operating licenses of two-thirds of the nation’s nuclear plants, including all of New Jersey’s plants, have been renewed.
Besides, there’s a good reason for nuclear power’s higher capital cost that state public utility commissions should take into account. Nuclear plants require larger capital investments than coal or gas plants, because nuclear utilities must build and maintain costly systems to keep their radioactivity from the environment. If fossil-fuel plants were required to capture and sequester the greenhouse gases they generate, they would cost significantly more than nuclear plants do. In fact, that day may have already arrived, since only a few new coal plants are being built in the United States due to increasingly stringent rules on airborne emissions.
As we plan for the future, we need to recognize the intrinsic economic and environmental value of increased energy reliability and diversity. But beyond that, we should not let an infatuation with natural gas and renewable energy sources such as solar and wind divert us from paying attention to the need for a secure and dependable energy supply.
James McGovern is an energy consultant to government and industry.
CONNECT WITH US:
On mobile or desktop:
• Like Times of Trenton on Facebook
• Follow @TimesofTrenton on Twitter