The More Things Change … Applying Learnings from Gas Build Out to Renewable Energy

Originally published for customers May 25, 2022.

What’s the issue?

A giant first step to successfully reaching our emissions goals would be to accept that there must be a balance between using the energy available to us that is accessible now, affordable, and reliable, while evolving to energy sources that are lower in carbon emissions necessary to fight climate change. While it’s uncertain as to whether — and when — the hydrogen, carbon capture and sequestration markets will emerge, the integration of renewable generation and electric transmission is well underway, but it needs to move faster.

Why does it matter?

Our ArboIQ Advisory Service team has been working with our customers on a range of renewable energy projects, from: (1) regional evaluations of the impact of renewable energy development on gas market demand; and (2) assessments of project viability, such as permitting and interconnection queues, necessary to determine whether to purchase projects to meet net zero obligations to (3) integrating renewable energy to power compressor stations and other facilities.

What’s our view?

The process for renewable energy deployment will be more complex — from a permitting, interconnection and tracking basis — and uncertain, from a timing and viability perspective than the gas infrastructure build out. Critical to the past and future energy transition is being able to anticipate and interpret government policies, regulatory agency reviews, and judicial oversight.

 


 

A giant first step to successfully reaching our emissions goals would be to accept that there must be a balance between using the energy available to us that is accessible now, affordable, and reliable, while evolving to energy sources that are lower in carbon emissions necessary to fight climate change. While it’s uncertain as to whether — and when — the hydrogen, carbon capture and sequestration markets will emerge, the integration of renewable generation and electric transmission is well underway, but it needs to move faster. Critical to the past and future energy transition is being able to anticipate and interpret (aka at Arbo as the other AI) government policies, regulatory agency reviews, and judicial oversight. For seven years our customers have engaged with our data analytics, software and subject matter experts to tackle these issues so they can more confidently deploy capital to produce, transport and trade, and consume traditional energy.

Today we apply lessons learned from supporting last decade’s energy infrastructure build-out to the energy evolution, specifically to renewable energy. One of the greatest increases in areas of engagement with our customers is through our ArboIQ Advisory Service engagements to assess renewable generation projects. Use cases for commercial teams have spanned the gamut, from: (1) regional evaluations of the impact of renewable energy development on gas market demand and (2) assessments of project viability, such as permitting and interconnection queues, necessary to determine whether to purchase projects to meet net zero obligations, to (3) integrating renewable energy to power compressor stations and other facilities. A key takeaway: the process for renewable energy deployment is more complex — from a permitting, interconnection and tracking basis — and uncertain, from a timing and viability perspective than the gas infrastructure build-out.

 

The More Things Change, the More They Stay the Same

As a veteran-owned business, we were honored to support our country’s transition to being energy independent, which had a major impact on our country’s precipitous reduction in greenhouse gas emissions. And we’re continuing to support our customers, who are building the gas infrastructure that must be built to support energy security, pricing, and stability issues at home and abroad. From the Marcellus and Permian to the Haynesville, project development has ticked up significantly, as we’ve reported and analyzed in recent ArViews, Heating up in the Haynesville - Projects Emerge, with Competition for LNG Growth and Permian Pipelines - The Sequel.

The most important, yet under-emphasized, lesson is that it isn’t just the innovation, capital, and entrepreneurial spirit that were critical to success. The pipeline build-out was successful because projects were regulated at the federal level, with a functioning regulatory framework. Even so, each project became more difficult than the last due to mounting opposition, primarily from environmentalists and renewable energy advocates.

Traditional energy developers are major proponents of renewable energy development, but one should not assume that environmentalists and affected landowners — of which there are many — haven’t already and won’t continue to oppose development. Also, to facilitate wind and solar we need interstate high voltage transmission infrastructure and lots of it. This requires government policies and regulatory frameworks that enable transmission projects to be built across borders of multiple states. These policies and frameworks do not exist today.

Here’s a simplified comparison of the gas infrastructure to renewable energy build-out:

renewables_vs_gas

 

Look no further than the following chart as support for the challenges that currently exist at the seven regional grid planning authorities (quasi government agencies), which coordinate, control, and monitor the electric grid in specific geographical, multi-state areas. A key issue stems from the interconnection generation queues, which is a complex process for connecting new sources to the grid. Back in the early part of the decade, the process worked rather well when generators added large centralized nuclear and gas plants. But when thousands of small renewable projects swarm the queue at the same time, it’s an inefficient process that can take years. This isn’t just a U.S. issue; last year in Spain, according to JP Morgan, 40 GW of wind power and 40 GW of solar power had connection permits for the grid but risked losing access due to administrative delays.

 

20220525.png

How Are We Helping Our Customers?

Just as no one could perfectly predict the FERC, state approval or litigation process for the last decade’s gas infrastructure buildout, no one will be able to perfectly predict the generation queues. But we must not let “perfect” be the enemy of “good.” We’re working with our customers to use our “AI” to see around corners in order to anticipate risks, quantify them, and then monitor until facts on the ground change, which they often do. When it comes to assessing generation queueing, our process is no different than our support for trillions of dollars of gas infrastructure development; we combine data, with the tools to interpret and visualize, and experts to zoom in on the gray areas.

In addition to renewable project queueing, below are some of the other related engagements involving renewable energy that we’re working with our existing traditional energy customers:

  • Mapping overlays with renewables / generation opportunities on existing footprint to identify business development / net zero opportunities
  • Emissions analysis & benchmarking for existing and competitor pipes in order to improve likelihood of success of signing up shippers to new projects
  • Greening up facilities, i.e., waste heat recovery, upgrading to electric compression from gas compression, in order to identify ways to meet net zero goals
  • Publicly Owned Utility Integrated Resource Plans (IRPs) Research to connect with utilities that have natural gas growth to identify business development opportunities in a specific location
  • Regulatory policy developments that impact retirements of specific fuel types, e.g, coal to connect with companies that have a potential need for natural gas for business development opportunities because of the fuel retirement
  • Tariff Research on specific fuel types, e.g., gas quality or blending of hydrogen into the fuel mix in order to meet net zero goals and green up footprint

If you would like to discuss renewable energy generation and other Advisory Service engagements, please contact us.

Recent Articles

March 24, 2022

Permian is Both Overbuilt and Underbuilt Depending on the Product

May 12, 2022

Will States Joining RGGI Use More Natural Gas and Less Coal to Generate Electricity?

May 31, 2022

Permian Pipelines — The Sequel