As the strategic knowledge partner for the 2019 Gastech Power & Energy event in Houston, Texas, A.T. Kearney will present leading-edge insights on global gas, energy transition, technology, and solutions.
Fuelled by climate change and other factors, the forces driving the energy transition are relentless. The energy industry faces an unprecedented array of choices and pressures amid technological, regulatory, geopolitical, and other uncertainties. The power sector has already been disrupted in many regions of the world, with gas and renewables outpacing all other forms of generation. Gas is steadily displacing coal for baseload generation and has been integral to enabling the growth of intermittent renewables, such as solar and wind.
With carbon emissions half that of coal, gas is helping to lower emissions while renewables are becoming a larger and more affordable part of the energy mix. Despite occasional challenges and bottlenecks, advancements in upstream gas production costs and midstream infrastructure development mean that we now take an abundant, stable, low-cost gas supply for granted in North America and many other parts of the world. Innovations in liquified natural gas (LNG) financing and development are transforming the way we think about connecting that plentiful gas supply to far-flung sources of demand. Gas to power projects holds the promise of filling electricity supply gaps around the world. All this suggests that gas is not just a bridge, but rather a vital transition enabler and a pillar of a cleaner energy future.
Gas-fired generation will no doubt expand over the next decade to meet demand. However, can a mix of economic, technology, environmental, and policy factors threaten the dominant role of gas? Will gas be just a bridge to a fully decarbonized power sector, playing a small role in the energy landscape? Can gas, as some have suggested and want, be relegated to a smaller role even faster than coal? On the economic front, will renewables race down the cost curve to outpace gas for an ever-larger share of power generation, with policies accelerating this process? Will technology innovations and cost declines make electricity storage a viable alternative to gas-fired peaker plants to pair with renewables? Will we see more moratoriums on new gas-fired generation as grid operators are forced to consider renewables plus storage solutions? Will issues such as fugitive emissions hamper public acceptance of gas, especially if there is a heightened sense of urgency for climate action in the years ahead? Will geopolitics and trade tensions be a barrier to smoothly linking global supply and demand?
To remain relevant in the energy transition and beyond, the gas industry must tackle these challenges. We see three priorities:
1. Address fugitive emissions: Take urgent and comprehensive steps to reduce fugitive emissions to minimal levels. Gas should be widely accepted as a solution and not a contributor to climate change. Studies show that, if unchecked, fugitive emissions can negate the effects of replacing a dirty coal plant with gas.
2. Improve the delivery of natural gas from the producing regions to where it is needed: It is a tragedy that stranded natural gas continues to be flared or vented, exacerbating emissions and burning money in the process, while critical demand goes unfulfilled. This is true even within gas-rich developing regions in Africa and elsewhere where vital gas-fired power projects are not realized as a result. Continued development of LNG and pipeline networks, facilitated by more project finance innovations, will guarantee that cheap natural gas supply is efficiently delivered to serve demand—both to confidently enable bold power-sector transformations, including in gas-poor areas, and to continue displacing coal. Continued engagement and vigilance will be necessary to mitigate the impact of geopolitics and trade tensions, which are a reality of global energy markets. This includes demonstrating through actions that gas is vital to economic development and a cleaner energy future in all countries.
3. Improve flexibility of gas-fired power generation plants to maximize their ability to integrate renewables into the grid: Frequent ramp-ups and shutdowns of gas-fired generation plants extract environmental and cost penalties and reduce their attractiveness and competitiveness as a partner to renewables. Deploying newer technologies available now, either as retrofits or in a new generation of combined cycle gas turbines, can improve flexibility while reducing penalties.
Scenarios, where gas loses to alternative sources of energy, cannot be ruled out because of rapid and disruptive technological progress and other factors. However, proactive actions can ensure that gas is accepted as and remains a vital part of the energy transition for the foreseeable future.
To learn more, attend the Gastech Power & Energy event at 11:30 a.m. on Thursday, September 19, when A.T. Kearney partner and Energy Practice leader Balu Balagopal will discuss Natural Gas: Bridge to or Pillar of a Clean Energy Future?
Gastech 2019 is fast approaching (17-19 September). Register now to join 35,000 international attendees and 700+ international exhibitors across the entire energy value chain. Or book your delegate pass now to join the world-renowned gas, LNG and energy conference!
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