In 2017, natural gas accounted for 31 percent of fuels used to generate electricity in the United States. According to the U.S. Energy Information Administration (EIA), natural gas has surpassed coal as the main fuel for electricity generation and will continue to grow its share of power production through 2050. AEP’s consumption of natural gas to generate electricity by our regulated utilities in 2017 was down by 17 percent from 2016, largely due to higher natural gas prices, which caused natural gas plants to be dispatched less frequently. As natural gas becomes an increasingly important baseload resource for the future, price, availability and security of supply become higher priorities.
Appalachian Power’s Clinch River Plant began removal of the three precipitators at the plant that were installed in 1975 to remove more than 99 percent of dry ash from the exhaust gas produced by the Plant’s coal burners. Two of the plant’s three coal units have been converted to natural gas; one unit was retired in 2015.
Natural gas is fundamental to our resource portfolio as we seek to diversify while maintaining the reliability and resilience of the power grid. As wind and solar capacity increases, they need a back-up source of power to ensure the grid operates uninterrupted. Natural gas provides the flexibility renewables need due to their intermittency. Natural gas is also cleaner than coal and is abundant.
Natural gas emits approximately 50 percent less carbon dioxide emissions compared with coal when burned to generate electricity. And high-efficiency combined-cycle natural gas plants can be built and operated with fewer environmental control systems than a coal-fueled plant. Since 2005, AEP has added over 3,000 MW of natural gas generating capacity to our portfolio, and we anticipate it will continue to grow.
We remain concerned that an overreliance on any single resource comes with great risk to the power grid and our customers. If our industry becomes overly dependent on natural gas generation and, at the same time, the transportation sector ramps up natural gas use and exports of domestic natural gas production continue, our customers will be more exposed to this historically volatile natural gas market. This is why we strongly advocate for an appropriate resource mix.
The deliverability of natural gas is critical, especially during peak demand periods and when variable resources, such as renewables, are not available. This is why several of our natural gas plants are connected to at least two pipelines or have alternative fuel capabilities. This gives us greater access to competitive supplies and reliable delivery. We continue to work with regulators to align the needs and interests of the gas and electric industries to gain more certainty and flexibility when procuring and scheduling natural gas for our units.
Currently, the majority of gas industry security issues (cyber and physical) are addressed through voluntary guidelines, which is concerning to AEP. The North American Electric Reliability Corporation (NERC) was created by FERC through the Energy Policy Act of 2005 as the protector of electric grid reliability and security, a function NERC takes very seriously. However, NERC currently does not have jurisdiction over the natural gas industry. As the electric industry becomes ever more reliant on the natural gas industry, the disparity in regulation is of growing concern.
Learn More About Gas/Electric Harmonization