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AS RENEWABLES INCREASINGLY DOMINATE THE POWER GRID, DEMAND FOR NATURAL GAS STORAGE WILL INCREASE

Written for the NWGA by Scott Smith – President, Spire Storage


Although projections reflect that demand for natural gas in the Western U.S. will fall over the next several decades, demand for natural gas storage will rise as the ramping ability of gas generation is challenged by the intermittency of wind and especially solar.


Spire retained Black & Veatch, the respected energy and power industry consulting and research firm, to analyze the demand for gas storage serving Western U.S. markets, notably California and Nevada, and determined that demand is set to rise substantially.


The Black & Veatch report focused specifically on demand in Western markets, including Salt Lake City, Las Vegas, and Southern California. The report examines the impact of renewable intermittency on gas-fired generation over the next 10, 20, and 30 years as California and other western states move aggressively toward their renewable energy goals.


Because solar is becoming the dominant renewable resource for California and Nevada, the need for firm dispatchable generation ramps up dramatically every afternoon as the sun sets, illustrated in the famous “duck curve” chart showing the difference between electricity demand and available solar generation over a typical 24-hour period, a difference that’s especially pronounced in warm summer months.


For power generation in Southern California, Black & Veatch projected that the daily ramping effect is amplified by greater penetration of renewables over the next 25 years. Pipeline deliveries can’t exceed their design capacities, and under extreme conditions, the line pack – the amount of natural gas “stored” in a pipeline – may not be enough to provide the hourly delivery volumes that generators need, Black & Veatch’s report predicts.


With California and Nevada gas turbines expected to spin up quickly every afternoon to maintain grid integrity and avoid load shed, also known as “brown-outs,” gas price volatility will increase – another reason why storage will be critical, to reduce the risk of exposing electric ratepayers to demand-driven gas price swings, as well as service reliability concerns.


While the renewables mix in the Pacific Northwest is less dependent on solar, it could face similar issues as its California and Nevada neighbors as the region integrates more renewable energy. For example, Oregon and Washington aim to reduce GHG emissions by 45% by 2035 and 2030, compared to 1990 levels. Natural gas storage can be used to fuel ramping power generation as renewable sources cycle up and down each day or in response to weather changes.


The business case for building more storage and transmission capacity is clear, which is why we’re pleased FERC has approved expansion plans for our Clear Creek storage facility, increasing our authorized injection/withdrawal capabilities tenfold. The expansion will allow Spire Storage to offer increased seasonality services, gas price volatility management services, and balancing services for the Western U.S market.


While gas storage assets are limited and potentially declining in California, given the political and regulatory environment, the trends are clear that additional storage capacity is required in the West to keep natural gas flowing when utilities and generators need it most. This makes identifying and contracting for storage capacity outside this region, reachable by pipelines such as Kern River, Northwest, Ruby, and Questar, a good bet. Please reach out to us at storagecommercial@spireenergy.com to discuss your gas storage needs.


The decarbonization imperative is a major factor driving decision-making in the energy value chain. We recently participated in a panel discussion on this topic at the Northwest Gas Association 19th Annual Energy Conference, June 8 – 9 in Bend, Ore.

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