Trends in Electricity Generation

The table below shows trends in electricity generation nationally over the last decade. The rise in usage of natural gas is the clearest trend. It also appears that this rise has eliminated rate increases (I am not sure that this is true for Ohio). As noted in the first footnote, wind and solar are still minor factors.

Year	Coal, %	Nat. Gas, %	Other, % *	Cost, cts/kWh
2002	50	18	32	N/A
2004	50	18	32	7.44
2006	49	20	31	8.90
2008	48	22	30	9.74
2010	45	24	31	9.83
2102 **	37	36	27	9.76

* Mostly hydro and nuclear; for 2012 through Oct. wind and solar represented only 6 % of electric generation

** Through Oct.

Sources:

EIA: Net Generation by Energy Source: Total (All Sectors)

http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_1_1

EIA:Average Retail Price of Electricity to Ultimate Customers

http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_03G

Scientific Basis for Gas-Well Setbacks

It appears that little or no scientific knowledge has been used anywhere in the country in designating setback distances for oil and gas drilling. Statutory distances are, at best, guesswork. I define scientific knowledge as articles published peer-reviewed journals and have been able to locate only two articles that shed light on the matter:

• S. G. Osborn, et al., “Methane Contamination of Drinking Water Accompanying Gas-Well Drilling and Hydraulic Fracturing” PNAS, 108 (2011) p. 8172

• L. M. McKenzie, et al., “Human Health Risk Assessment of Air Emissions from Development of Unconventional Natural Gas Resources” Sci. Total Envir., 424 (2012) p. 79

Osborne, et al. measured methane contamination of drinking-water wells near drilling operations in northern Pennsylvania. They found enhanced concentrations within 1000 feet of the drilling sites.

McKenzie, et al. measured air pollution near gas wells in Colorado. They concluded that the health risks were significantly raised within one-half mile of the wells.

While no definitive conclusions can be made on such a small body of evidence, the available results suggest setbacks of 1000 feet from water supplies and one-half mile from populated areas. However,large setbacks severely limit the number of wells drilled. Even in sparsely populated areas of eastern Ohio a half-mile setback might preclude drilling altogether.

I want to thank the following for responding to my query for sources: Julie Boyle, Elisabeth Radow, Stan Scobie, Bette Tatham, Louise Usechak, and Roberta Winters.

Cars - Efficiency of Electric vs. Gas (Revised 11/09/120

Cars are very inefficient – they wast three-quarters of the energy provided by the burning of gasoline. In turn, gasoline is a very expensive fuel. Natural gas and electricity provide the same amount of energy at about one-tenth the cost of gasoline (even before the gasoline tax is factored in).

While the electric car has problems with range and infrastructure, it certainly is an energy saver. It only uses about one-fourth of the energy of the gasoline-powered car, since electric engines are much more efficient than gasoline ones. Even when the energy used to produce the electricity is taken into account, the electric car is about thirty percent more efficient.

The electric car is also less expensive to fuel. Exact numbers are difficult to state since dealer's price varies and the price of both gasoline and electricity are difficult to predict over long periods of time. Using manufacturer's suggested retail price and current costs of gas and electricity in Central Ohio the $7,000 price difference will be made up in about 80,000 miles.



SOURCE: Data for Nissan Leaf SV and Nissan Altima 3.5 SL.

How Long Will Our Natural Gas Last ?

See Also the post for September 3, 2012

According to current estimates, the U.S. has about a one-hundred-year supply of natural gas. These estimates assume that we will keep using gas at the same level as today. However, gas consumption has been rising at the rate of about four percent annually over the past few years. If this rate persists we have only a forty-year supply (see Mathematical Derivation below). However, there is great uncertainty in this result.

Estimates of supply are notoriously uncertain. We may have more or less gas than currently thought. Also a new technology may come along to produce new supplies (just as fracking has done). More certainly, the U.S. will likely start exporting large quantities of natural gas to Europe and Asia, where prices are much higher.

The recent rise in consumption is mostly due to electric generation and this rise is likely to be sustained. Another source will be increased use of methane (natural gas) feed stock replacing oil in chemical processes. There also may be some increase in natural gas as fuel for vehicles, currently a very minor application. Countering these trends will be the lower need for heating as winters become warmer due to climate change.

In sum, there are too many uncertainties in estimates of how long our supply of natural gas will last. My inclination is to believe that a century is a gross overestimate.

Data Sources EIA Table “Natural Gas Consumption by End Use” and NaturalGas.org “Resources”

Mathematical Derivation

Let total reserves be S and current year's usage be c; with no increase there is a 100-year supply of natural gas and S/c = 100. Let consumption rise by r percent per year.. The fist year we use c, the second year we use c(1+ r), the third year we use c(1+ r)², etc. So we need the sum of the series:

c[1 + (1+ r) + (1+ r)² + . . .]

which is:

S =c [(1 + r)ⁿ -1]/[(1+ r) -1].

where n is the number of years that the reserves will last. Rearranging and solving for n gives 40 years for r = 0.04.

Estimating Cost of Electricity Generation by Natural Gas

The price of electricity generation using natural gas is very sensitive to the cost of the gas. In fact, the two are roughly proportional (e-mail from Amy Sweeney, EIA, 18 September 2012). To a good approximation, doubling the cost of gas doubles the cost of generation. So we need to know the ratio between gas price and generation cost.

The U.S. Energy Information Administration provides the data we need – five-year records (2006-2010). The ratio electricity/gas ratio turns out to be 10.4, using the Henry Hub gas price (named for a terminal in Louisiana) at the New York Mercantile Exchange. This ratio is good within about 25 percent, good enough to estimate how competitive wind and gas are. Recently, the Henry Hub price has been $2.75-$3.00 per million BTU, so that the generation price is around $30 per MWh. Since wind costs around $55 per MWh, it  does not appear particularly competitive. However, the volatility of gas price is an inhibitor to its use  (See my blog Wind Energy Now Competitive with Fossil Fuels dated 11 July 2012)

Note:  as of 07 Dec. 2012, the natural gas price had risen to $3.60, making electricity generation from it cost around $38; still not enough to make wind less costly, but getting   there. 

Update of Wind Power and Electric Rates

Wind Energy Does Not Increase Electric Rates

Table of Wind Power and Electric Rates

in Ten Midwest and Appalachian States

State	Wind Power, GW	Average Electric Rates, Cents/kWh
Illinois	3.055	8.65
Indiana	1.342	8.29
Iowa	4.524	7.45
Kentucky	0	7.05
Michigan	0.487	10.76
Minnesota	2.718	8.69
Missouri	0.459	8.23
Ohio	0.419	8.87
West Virginia	0.583	8.10
Wisconsin	0.636	10.24

Note: 1 GW is the power of a typical nuclear reactor

Sources: American Wind Energy Association, U.S. Wind Power Capacity Installations by State, June 2012; U.S. Energy Information Administration, Table 5.6.B, Average Retail Price of Electricity to Ultimate Customers by End-Use Sector, by State, June 2012 and 2011 (June 2012 used in table)

Natural Gas Consumption Trends

I have been under the impression that the consumption of natural gas has been rapidly expanding. The Energy Information Administration data do show a rise over the past fifteen years, but it is only a modest seven percent (about +1/2% per year). However, there has been significant change among the various uses. The amount of gas used to generate electricity has almost doubled, while residential, commercial, and industrial usages have all decreased. It is doubtful that these trends were caused by the recession, since they are found during the years before 2008 (start o0f the recession). Table 1 lists the data.

Table 1. Natural Gas consumption by

End Use. Data from EIA

(Tcf = Trillions of cubic feet)

END USE		Amount, Tcf
		1997	2007	2011
Total		20.8	21.3	22.3
Electricity		4.1	6.8	7.6
Total less Electricity		16.7	14.4	14.7
Residential		5.0	4.7	4.7
Commercial		3.2	3.0	3.2
Industrial		8.5	6.7	6.7

Two other causes of the decrease in consumption are possible – global warming, which cuts the demand for heating in the winter, and use of more energy efficient equipment. Data on individual usage gives some insight. Table 2 shows that the small decrease in overall consumption hides a large decrease by the average household. It is doubtful that this decrease would be largely due to efficiency gains. It appears that a side effect of climate change is a decrease in the demand for natural gas by a major market for its use.

TABLE 2. INDIVIDUAL RESIDENTIAL

NATURAL GAS CONSUMPTION. Data from

AGA and U.S. Census Bureau

(Mcf = thousands of cubic feet)

Year	Individual	Number
	Residential	Households
	Use, Mcf	Millions*
1996	170.5	114.1
2006	126.5	126.4
2010	122.8	130.6
Percent Change
1996-2010	-28.0%	14.5%
*1996 data interpolation of 1995 and 200