Easing the natural gas crisis: Reducing natural gas prices through increased deployment of renewable energy and energy efficiency
Heightened natural gas prices have emerged as a key energy-policy challenge for at least the early part of the 21st century. With the recent run-up in gas prices and the expected continuation of volatile and high prices in the near future, a growing number of voices are calling for increased diversification of energy supplies. Proponents of renewable energy and energy efficiency identify these clean energy sources as an important part of the solution. Increased deployment of renewable energy (RE) and energy efficiency (EE) can hedge natural gas price risk in more than one way, but this paper touches on just one potential benefit: displacement of gas-fired electricity generation, which reduces natural gas demand and thus puts downward pressure on gas prices. Many recent modeling studies of increased RE and EE deployment have demonstrated that this ''secondary'' effect of lowering natural gas prices could be significant; as a result, this effect is increasingly cited as justification for policies promoting RE and EE. This paper summarizes recent studies that have evaluated the gas-price-reduction effect of RE and EE deployment, analyzes the results of these studies in light of economic theory and other research, reviews the reasonableness of the effect as portrayed in modeling studies, and develops a simple tool that can be used to evaluate the impact of RE and EE on gas prices without relying on a complex national energy model. Key findings are summarized.
- Research Organization:
- Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)
- Sponsoring Organization:
- USDOE. Assistant Secretary for Energy Efficiency and Renewable Energy. Office of the Deputy Assistant Secretary for Technology Development. Office of Wind and Hydropower Technology Program (US)
- DOE Contract Number:
- AC03-76SF00098
- OSTI ID:
- 838985
- Report Number(s):
- LBNL-56756; R&D Project: 67675B; TRN: US200509%%108
- Resource Relation:
- Other Information: PBD: 21 Dec 2004
- Country of Publication:
- United States
- Language:
- English
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