Clean Affordable Energy for TVA
Newly accessible supplies of natural gas across America are allowing electric power providers throughout the country to take a hard look at their generation portfolios and evaluate how best to meet future demand for electricity. As power providers look to the future in evaluating their base load generation sources, they'll need to address two issues: how to maintain affordable prices for their customers and also meet emissions reduction requirements. Natural gas can play a significant role in addressing these issues and help TVA meet its goal in becoming one of the nation's leading providers of low cost and cleaner energy by 2020.
As a generation source, natural gas has a lot to offer TVA:
- Clean Energy
- Abundant Supplies
- Affordable and Stable Markets
- Reliable Pipeline Infrastructure and Storage Capabilities
Clean Energy Source
When it comes to carbon emissions, natural gas burns cleaner than other fuel sources. A typical natural gas power plant emits about 60 percent less CO2 than a conventional coal-fired power plant. And, that's just the beginning of its clean-energy profile. Natural gas also has significantly fewer Nox and SO2 emissions and and no mercury or particulate pollution.
Lower Capital Costs
According to the Energy Information Administration (EIA), natural gas will account for 62% of capacity additions from 2009 to 2035. Further, costs for combined cycle natural gas (CCNG) plants are expected to stay stable and affordable at or below $1,000/kilowatt; the future capital cost for nuclear plants will reach nearly $5,300/kilowatt, a dramatic 37% rise since last year's EIA report. On the other hand, EIA's figures for future power plant capital costs (in dollars per kilowatt) show future increases for nuclear, coal (for pulverized, CCS, IGCC), and wind.
Lower Levelized Cost of Electricity
The chart below shows the levelized cost of electricity using EIA data for its Annual Energy Outlook. In generating electricity, natural gas is not only a cleaner choice but also a cost-effective choice. In fact, expected costs in 2016 show that natural gas has the lowest prices - lower than coal, wind, and solar.
Because levelized cost of electricity takes into account ALL the costs of power over its entire life, including capital costs to build plants, natural gas wins out. One reason that coal is more expensive is that the capital costs to build those plants are much higher. The capital cost associated with a combined cycle natural gas (CCNG) plants is significantly less than that of other power plants, making it more affordable to produce one kilowatt hour of electricity from natural gas.
Abundant Supplies
Over the past few years, advances in drilling technology, and the geographic diversity of the shale plays, have increased drilling success rates, producing not just lower development costs but a reliable, abundant and steady supply of natural gas.
The Energy Information Administration, the Potential Gas Committee, MIT and Cambridge Energy Research Associates all have arrived at the same conclusion: Our nation now has enough natural gas right here in America to power our economy for generations.
Affordable and Stable Pricing
This increase in abundance has transformed the long-term outlook for natural gas supply and pricing, changing the energy landscape across the country. Future natural gas prices will stay stable for at least the next 25 years, according to a recent U.S. Energy Information Administration outlook.
These vast domestic natural gas supplies have completely shifted the paradigm for natural gas. Long-term for customers, this means greater price stability and a steady, reliable supply for generations.
The Massachusetts Institute of Technology said in a recent report that natural gas will "assume an increasing share of the U.S. energy mix over the next several decades, with the large unconventional [shale gas] resource playing a key role. And Cambridge Energy Research Associates (CERA) says in its 2009 "Fueling the Future" report, "The unconventional natural gas revolution has lowered the natural gas price outlook and made gas more competitive while encouraging higher expectations for security of supply-a dramatic shift from just half a decade ago.''
CERA forecasts the power industry will likely increase the share of natural gas in the fuel mix because, as it explains, natural gas power plants ``can be built more quickly and easily than coal, nuclear, or hydro and will benefit from credible expectation of lower long-term natural gas prices."
Reliable Pipeline Infrastructure and Storage Capabilities
So we have vast domestic supplies and stable prices. The question then becomes: Can we get the natural gas where it needs to go?
The answer is yes. Right now, the U.S. has over 2.5 million miles of pipelines. That's enough to circle the earth about 100 times. The rapid develop of new natural gas resources in recent years have also led to expanded pipeline construction. In 2008, completions of new pipelines and expansion of existing pipelines were higher than they had been in more than a decade, increasing capacity by more than 44 billion cubic feet per day.
The Southeast region is a major transportation corridor for natural gas destined for the Midwest and Northeast natural gas markets. Interstate pipelines exiting the Gulf region and Texas have the capacity to transport more than 45 bcf per day of natural gas-most of which passes through the Southeast pipeline system, in particular the Tennessee Valley region.
