Will One New Pipeline Project In NH Fix The Problem Of High Costs? Answer: Maybe …. some. There are links below so you can read about the proposed Access Northeast Pipeline connecting to the proposed Maritimes & Northeast Pipeline in greater depth. We have existing retail distribution pipelines in New Hampshire which provide limited access to natural gas in portions of the southern part of our state to Liberty Utilities (90,000) and Unitil (30,000) customers, per NHPUC 2014 data. When it comes to fuel costs/btu, few would argue that natural gas doesn’t have the obvious alternatives (oil, kerosene, propane, coal, and wood) beat most of the time on both simplicity and price. The real exception has been during winter constraints in the pipelines occur during extreme cold weather periods when natural gas can spike due to competition with gas fired electrical generation use. The historical problem (prior to the gas generators) was lack of access …… you either have a pipeline available in your area to tie into or you don’t. As mentioned before, recently increased winter LNG tanker availability into Boston, to backstop the pipelines, was intended to help mitigate the winter peak natural gas conditions. Many companies have also opted for duel fuel capability equipment, so they can switch away from a fuel source that may experience temporary supply or pricing problems (like natural gas or propane). Today, oil can be easily stored on-site as a back-up fuel to pipeline gas, and in the future you can expect LNG to offer the same kind of cost based fuel switching.
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You can’t sell what you don’t have. That is tone problem retail suppliers (Liberty & Unitil) have had …….along with of course the periodic price spikes, mainly experienced back in 2014. In the complex supply chain of natural gas, there is always a premium to be had for guaranteed rates and guaranteed supplies. This is not an area small companies can easily play in for their heating demands alone. When large volumes of gas and process heat requirements enter into the equation, businesses have some buying power. If you take gas fired electrical generation out of the equation, the supply problems and price spikes go away …….. but so does the clean energy they offer to the region. Now comes the thornier problems alluded to in Vol 2: who takes the financial risk for the costs of building new pipelines ………… the provider or the consumer? And if you want to double down on risk ……… what consumer (if any) takes the risk, gas consumers or electrical consumers? Putting it another way, how much of any new pipeline capacity should be allocated for new gas fired electric generating plants versus expansion of the use of natural gas as an end user fuel source? I think we are now into some uncharted waters.
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Compared to other New England states, New Hampshire has been slow to embrace the use of energy efficiency as an alternative to building more energy supply capacity. As pointed out previously, ISO-NE has already observed and modeled the fact that energy demand is not increasing ……..and they are projected it to hold steady at about 130,00 GWH annually through 2024. Energy efficiency investment (demand side management) has proven itself to be the most cost effective method of reducing electrical demand, and this is already reflected in past and future changes to our building codes (future Vol). Beyond codes, we also find education and adoption of new initiatives like (ZNEB) zero net energy buildings, that produce as much energy as they use (future Vol) making an impact. Adding in new technology in battery storage, we already see pilot projects by electric utilities where every home on the test grid is being fitted up with Tesla Powerwalls with and without solar PV installations, as a means to load shift the demand curve. Heat pump technology is also radically infecting the market for space heating, and for hot water heating alternatives that are far more efficient than previously thought possible. I could go on…….and on.
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So back to the question of the risk of financing new gas pipelines. Is our “energy crisis” so great (as outlined at this business event) that NH businesses should embrace the idea of using some of their own money (capital) to finance pipelines that someday may supply gas to someone else’s electric power plant that may be located in another state ? You can probably guess my opinion on this ….. but, it’s your pocketbook not mine. In Vol 6 we took a broad brush view of the future electric grid and how it will function differently than the past. Just how much will center around natural gas in New Hampshire (and New England) in the long term is anyone’s guess ….. but once you finance it, and “build it”, you own it …. good or bad. You can make your own informed decision on where to put your own money. New studies have begun to project what the future gas market will look like with the accelerated growth of U.S. LNG exports, and how that business will effect the long term costs of natural gas for electrical generation:
“Looking out to 2035, EVA predicts Henry Hub gas prices at $7.50/MMBtu. While there will be some natural upwards pressure on electricity markets, Schaal said growing renewable resources would also help mitigate increases, as well as lackluster load growth due to energy efficiency.”
“Definitely on a regional basis in this country, renewables are showing they have an upper hand on natural gas capacity,” Schaal said. “Renewables are supplying an increasing amount of generation currently today and in future years. That is one of the reasons why the price impacts we expect are somewhat mitigated, particularly in outer years, because we have other sources of power that are up and coming and gaining market share.”
Other new NH studies make the case that new pipeline capacity is not needed at this time for continued economic growth in New Hampshire, due to the yet untapped potential for greater efficiency and renewable energy growth in the state. This is a strong case that was never fully vetted in this way before now.
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Simply put, the business community should be in general support of the prospect of more natural gas supplies making it into New Hampshire. As a lower cost, clean burning fuel, natural gas offers benefits not found in oil or propane alternatives …. and offers a sound base for firing heating systems and CHP options. However, pipeline investment risks should remain with the pipeline developers ……… especially in New Hampshire, as all of the proposed new gas fired electrical generating plants in the Access Northeast plan are located in Connecticut and Massachusetts, not New Hampshire.
New Hampshire natural gas customers will pay for increased costs for pipeline expansion when they purchase their supplies through their retail supplier, but large users may also find access to new sources/options to mitigate those increases if capacities were increased. It remains to be seen just how important natural gas fired electrical generating plants will become in the future when they have to compete on the pricing side of gas supplies that are headed for higher value LNG export opportunities.
MARITIMES & NORTHEAST PIPELINE
NATURAL GAS CONSUMPTION IN NEW ENGLAND
