New Study: Even With Cheap Battery Storage, Natural Gas Still Most Cost Effective Option
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WASHINGTON, December 20, 2018 – The American Petroleum Institute released results from a new study today showing that the adoption of battery storage to enable greater renewables development will be slower than anticipated, even if battery prices drop and higher natural gas prices incentivize their use.
“This study corroborates what API has been saying all along, which is that natural gas is the natural baseload partner to renewable energy sources, which are still only projected to make up 15 percent of domestic energy use by 2050 according to the EIA,” said Todd Snitchler, Vice President of Market Development and Industry Operations. “Even if battery storage prices drop precipitously in the coming years, they still will not be adopted at the rates necessary to make a dramatic impact on natural gas power generation and likely won’t lower electricity prices for consumers according to this study.”
The new report, titled “Exploring the Implications of Electricity Storage on Natural Gas Consumption Using NEMS-REStorePlus,” analyzed a set of scenarios, targeting costs for grid storage and natural gas resource availability as the variables. The low-cost, low-resource case of the study, in which battery costs plunged by 40 percent and natural gas prices shot up to average over six dollars per mmBtu in 2050, found there would only be 47 GW of battery storage capacity adopted over the study period. This scenario showed the highest amount of battery storage capacity, with battery adoption accelerating significantly more than in other scenarios after 2030.
The study also found that electricity prices, residential electricity and total energy expenditures were not measurably impacted by storage penetration – showing that subsidizing battery storage will likely not bring down costs for consumers. Electricity sales and natural gas volumes were also not measurably impacted by storage penetration. When the cost of battery storage was reduced the primary technology it was projected to displace was not natural gas, but solar photovoltaic capacity.
API is the only national trade association representing all facets of the natural gas and oil industry, which supports 10.3 million U.S. jobs and nearly 8 percent of the U.S. economy. API’s more than 600 members include large integrated companies, as well as exploration and production, refining, marketing, pipeline, and marine businesses, and service and supply firms. They provide most of the nation’s energy and are backed by a growing grassroots movement of more than 47 million Americans.