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Power Generation

Introduction

The PennEast partner companies realize the importance of the country’s diverse energy mix. That’s why they have over seven times the investments in renewable energy than the total cost of the PennEast Pipeline, amounting to billions of dollars in solar and wind power across the United States.

Renewables are an important component of a diverse energy supply, but natural gas is needed to supply on-demand, clean back-up power to the electric grid when the sun isn’t shining and the wind isn’t blowing.

Across Pennsylvania, New Jersey and the PJM, natural gas electric generation is on the rise. The increased role of reliable natural gas in the power sector is helping keep our economy running cleanly as many coal plants have or are retiring for environmental and cost reasons (such as the New Jersey plant retirements in Jersey City and Hamilton announced in October 2016). This trend toward greater natural gas powered electric generation has positioned the U.S. as the world leader in CO2 reductions.

American Electricity Mix

American electricity primarily is generated from coal, natural gas and nuclear energy sources. These three sources accounted for 85 percent of the electricity generated in the U.S. in 2015; however, renewable sources also play an important role. Hydropower generated 6 percent of electricity in 2015; wind provided 4.7 percent, solar delivered .65 percent, and geothermal contributed 0.4 percent.

Electricity Outlook

Projecting to 2040, natural gas alongside renewables’ share of the power sector mix is predicted to increase, while coal and nuclear generation declines.

There are many contributing factors to the growth of natural gas and renewable generation.
While America’s vast natural gas supplies and long-term price stability makes natural gas an attractive generation fuel for decades to come, regulations such as the Mercury and Air Toxics Standards (MATS) and the U.S. Environmental Protection Agency’s Clean Power Plan, make it less likely coal will play as prominent a role in electric generation.

For example, Pennsylvania and New Jersey are both part of the “PJM.” The PJM coordinates the movement of wholesale electricity in 13 states and Washington D.C. Within the PJM, over 55 gigawatts of natural gas-fired capacity are “in the queue.” While not all of this proposed generation will be constructed, this new natural gas-fired electricity will help account for the more than 19 gigawatts of coal generation capacity retired in the PJM between 2011 and 2015, with another 1.8 gigawatts of coal generation planned to come offline post-2015. This increase in reliance on natural gas in the PJM is a significant reason for the construction of the PennEast Pipeline: to increase pipeline capacity and thereby, available gas supply in the mid-Atlantic region to meet electric generation needs. The low cost of natural gas translates directly into lower electricity prices.

Alongside the growth of natural gas electric generation, there has been a parallel decrease in the electric generation sector’s carbon dioxide emissions. Natural gas-fired generation generally emits half the CO2 that coal-fired generation emits. In April 2015, natural gas electric generation surpassed coal-fired electric generation for the first time since the start of the data being collected (1973). That same month, monthly power sector carbon dioxide emissions reached a 27-year low.

Another factor contributing to the growth of natural gas-fired electricity is its low-cost of construction compared to new coal, nuclear, or renewable technologies. New natural gas combined cycle units are also more efficient to operate than existing natural gas-, oil- or coal-fired steam plants, according to the EIA. In fact, EIA forecasts natural gas-fired plants will account for 58 percent of total capacity additions from 2013 to 2040.[

Natural Gas & Renewables

While natural gas-fired capacity increases, renewable sources also will increase. As renewable power grows, natural gas is uniquely suited to serve as its foundation fuel. As there are varying amounts of sun and wind, based on the season and time of day, solar and wind power requires natural gas and other traditional fuels on standby as part of a reliable backup system. (For every kilowatt of renewable electricity, there must be a kilowatt of back-up.)

Natural gas is the least expensive and most flexible fuel for providing this back-up electricity supply; however, these natural gas-fired power plants require increased pipeline capacity to ensure that they can run when they are needed.

By delivering abundant local natural gas reserves, PennEast will help the region ensure ample natural gas supplies are safely brought to market, and available for electric power generators to meet existing and future use.