Originally published for customers September 28, 2022
What’s the issue?
Major studies by both Princeton Net Zero and the National Renewable Energy Laboratory point out a key problem with a wind and solar only solution to the nation’s net-zero goals. These studies show that the prime locations for wind and solar production are not located anywhere near the major demand centers along both coasts.
Why does it matter?
Most people would think that the only problem this presents is the need to build more transmission lines, which is certainly true, but the cost of moving that energy is also a factor, both in the capital costs and in the amount of energy lost during the transmission.
What’s our view?
Natural gas-fired power has a number of benefits over wind and solar. First, the amount of energy lost in the transportation of gas over long distances is far lower. Second, there are major sources of gas located close to the demand centers along the coasts. Third, based on historical costs of major pipelines constructed over the last five years, the capital costs of comparable pipeline capacity is much lower than that of electric transmission lines. These cost advantages and the ability to run on demand make gas-fired electric capacity a key contributor in NREL’s lowest cost solution for a clean electric grid by 2035.
Major studies by both Princeton Net Zero and the National Renewable Energy Laboratory (NREL) point out that a key problem with a wind and solar only solution to the nation’s net-zero goals is that the prime locations for wind and solar production are not located anywhere near the major demand centers along both coasts. Most people would think that the only problem this presents is the need to build more transmission lines, which is certainly true, but the cost of moving that energy is also a factor, both in the capital costs and in the amount of energy lost during the transmission.
Natural gas-fired power has a number of benefits over wind and solar. First, the amount of energy lost in the transportation of gas over long distances is far lower. Second, there are major sources of gas located close to the demand centers along the coasts. Third, based on historical costs of major pipelines constructed over the last five years, the capital costs of comparable pipeline capacity is much lower than that of electric transmission lines. These cost advantages and the ability to run on demand make gas-fired electric capacity a key contributor in NREL’s lowest cost solution for a clean electric grid by 2035.
Wind and Solar Power are Locationally Challenged
Both NREL and Princeton Net Zero provide maps showing where the most productive wind and solar production will come from as the nation seeks to build an electric grid with zero carbon emissions.
While the two studies vary a bit on the primary locations for wind and solar, they both are focused on the middle of the country. The problem this creates is that the vast majority of the population is not located near those areas.
If we draw a circle around the core areas for wind and solar, approximately 12 to 15% of the U.S. population is located within 500 miles of those production areas. As NREL notes in its study, it assumes that long distance high voltage transmission lines will lose an average of 1% for every 100 miles the electricity travels. Given that these production areas are at least 900 miles away from major cities like New York and more than 1200 miles from Boston, that means the loss in transmission alone would be about 10% of the energy produced. In contrast, the production basin of the Marcellus/Utica, represented by Morgantown, West Virginia and Pittsburgh, Pennsylvania in the chart above, is less than 500 miles from any of the East Coast demand centers. The amount of gas used to transport gas that far is typically less than 2% as reflected in the retainage percentages of the pipelines. For instance, Tennessee Gas Pipeline, which runs from the Marcellus/Utica to the East Coast, retains less than 1.5% of the gas it receives for transportation to compensate it for the gas it uses to provide that transport. Similarly, Texas Eastern Transmission retains less than 2% of the gas it receives for transportation to compensate it for the gas it uses to provide that transport.
Transmission Lines Are More Costly to Build Than Pipelines
Electric transmission lines are also more costly to build per mile of capacity than gas pipelines.
As shown above, NREL estimates that the cost of completing the needed transmission lines varies from a low of about $2,000 per megawatt-mile (MW-mile) to a high of almost $10,000 per MW-mile.
Converting the pipeline capacity of recent long distance pipelines to the MW capacity of typical gas-fired power plants shows that the cost of pipelines to move the gas from the production areas to the demand centers is far lower.
As seen above, based on major pipelines greater than 100 miles in length and built in the last five years, our data shows that the capacity of those pipelines, if the gas transported had been used at power plants, would have resulted in a far lower cost per MW-mile than the electric transmission lines, ranging from a low of $419 per MW-mile to a high of only $2,103 compared to the $10,000 estimate in the NREL study.
Overall Costs of a Wind and Solar Only Option is Higher
It is likely that these combined challenges for wind and solar, along with their intermittency, is what results in NREL determining that solutions that include gas as a key component of the solution will cost less to implement. According to NREL’s study, the net present value of the cost for implementing the wind and solar only solution is about ten percent higher than the all options alternative without permitting reform and about twenty percent higher than the all options alternative that includes permitting reform.