Role of Energy Efficiency in Rebalancing Natural Gas Markets

Transcription

1 Role of Energy Efficiency in Rebalancing Natural Gas Markets R. Neal Elliott, Ph.D., P.E. Industrial Program Director ACEEE Washington, D.C. July 26, 2005

2 The American Council for an Energy Efficient Economy (ACEEE) Non-profit (501c (3)) dedicated to advancing energy efficiency through research and dissemination. 25 staffers in Washington DC, Delaware, Michigan and Wisconsin Industry, Buildings, Utilities, Transportation, and National Policy Conferences and Publications Funding: Foundation and Federal grants (50%) Specific Contract work (20%) Conferences and Publications (25%)

3 Natural Gas Consumption by Sector 25,000,000 Electric Power Transport 20,000,000 15,000,000 10,000,000 Industrial Commercial Residential Consumption (Mill. Cubic Feet) 5,000, Source: EIA 2003

4 U.S. Dry Natural Gas Production 25,000,000 20,000,000 Domestic Production Peaked in ,000,000 10,000,000 Dry Production (MMcf) 5,000, Source: EIA 2004

5 U.S. Sources of NatGas 22,000,000 20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 Canada LNG U.S. Production Production or Imports (MMcf) 2,000, Source: EIA 2004

6 Average Monthly NatGas Prices Well head Industrial Residential Average Monthly NG Prices ($/MMBtus) January-85 January-86 January-87 January-88 January-89 January-90 January-91 January-92 January-93 January-94 January-95 January-96 January-97 January-98 January-99 January-00 January-01 January-02 January-03 January-04 January-05 January-06 Source: ACEEE 2005 from DOE/EIA Data 2005

7 Natural Gas Markets Lower-48 Dry Gas Production vs. Dry Gas Productive Capacity (Bcfd) $10 $9 $8 $7 $6 $5 $4 $3 $2 $1 $0 Historical Gas Price at Henry Hub ($ per MMBtu) Productive Capacity Gas Production Source: EEA 2005

8 Tight Markets Causing Economic Pain Fundamental supply/demand imbalance. High prices pinch gas-intensive industry and low-income residential consumers Limited near-term supply options Alaska Gas 8-12 and LNG 3-7 years away Demand reductions through efficiency and conservation most effective near-term strategy, and critical to the long-term plan

9 Role for Energy Efficiency Supply solutions take years to come to market If modest increases in gas demand produced large price increases, then small decreases should produce large price reductions Efficiency energy can produce savings in both the near-term and longer-term

10 ACEEE Research Approach Sector estimates by State of the nearterm implementable potential for energy efficiency and conservation programs for: 1. End-User Natural Gas 2. End-User Electricity Calculated reasonably achievable savings based on sector end-uses (i.e. space heating, motors, lighting...)

11 Using EEA Natural Gas Model EEA respected, independent natural gas analysts used for current and past NPC NatGas studies Fully integrated natural gas market model incorporating supply, transmission, storage and consumption at 106 nodes Using July 2003 projection as base case ACEEE modified consumption only model handles other issues (e.g., fuel switching, demand destruction, addition resource choices)

12 Impact of Energy Efficiency on Henry Hub Natural Gas Pricing EEA May 2004 National EE only Midwest EE only Historic NatGas Price ($/MMcf) Source: EEA 2004 and ACEEE 2005

13 Gas Consumption Reductions from Energy Efficiency 1,000, ,000 0 NatGas Savings (MMcf) -500,000-1,000,000-1,500,000-2,000,000-2,500,000-3,000,000 POWER GENERATION GAS DEMAND INDUSTRIAL GAS DEMAND COMMERCIAL GAS DEMAND RESIDENTIAL GAS DEMAND Source: ACEEE 2005

14 Benefits and Costs from Reductions in Energy Expenditures Total Benefits = $142,800 Million Total Investment and Program Costs = $22,441 Million Industrial Elec. 0.6% Power Gen. Gas 39.3% Commercial Elec. 26.5% Industrial Elec. 15.1% Commercial Elec. 1.2% Residential Elec. 1.2% Residential Gas 9.5% Commercial Gas 1.8% Industrial Gas 27.0% Industrial Gas 3.2% Commercial Gas 2.0% Benefits Residential Gas 28.8% Residential Elec. 44.0% Costs

15 Conclusions We can do something about high natural gas prices encourage energy efficiency Only viable near-term options supply options will take 2-7 years Electric efficiency critical because of expanded natural gas generation National decision makers need to lead NOW consumers are motivated but need direction Sooner we start the sooner states will see benefits

16 Contact Information R. Neal Elliott, Ph.D., P.E. Industrial Program Director ACEEE 1001 Conn. Ave, NW, Suite 801 Washington, DC For more information and updates on Natural Gas and Energy Efficiency visit: