Can Deployment of Renewable Energy and Energy Efficiency PutDownward Pressure on Natural Gas Prices
High and volatile natural gas prices have increasingly led to calls for investments in renewable energy and energy efficiency. One line of argument is that deployment of these resources may lead to reductions in the demand for and price of natural gas. Many recent U.S.-based modeling studies have demonstrated that this effect could provide significant consumer savings. In this article we evaluate these studies, and benchmark their findings against economic theory, other modeling results, and a limited empirical literature. We find that many uncertainties remain regarding the absolute magnitude of this effect, and that the reduction in natural gas prices may not represent an increase in aggregate economic wealth. Nonetheless, we conclude that many of the studies of the impact of renewable energy and energy efficiency on natural gas prices appear to have represented this effect within reason, given current knowledge. These studies specifically suggest that a 1% reduction in U.S. natural gas demand could lead to long-term average wellhead price reductions of 0.8% to 2%, and that each megawatt-hour of renewable energy and energy efficiency may benefit natural gas consumers to the tune of at least $7.5 to $20.
- Research Organization:
- Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)
- Sponsoring Organization:
- USDOE. Assistant Secretary for Energy Efficiency andRenewable Energy. Solar and Renewable Resource Technologies
- DOE Contract Number:
- DE-AC02-05CH11231
- OSTI ID:
- 919918
- Report Number(s):
- LBNL-57270; ENPYAC; R&D Project: 574617; BnR: EB2502010; TRN: US200822%%605
- Journal Information:
- Energy Policy, Vol. 35, Issue 1; Related Information: Journal Publication Date: 01/2007; ISSN 0301-4215
- Country of Publication:
- United States
- Language:
- English
Similar Records
The potential impact of renewable energy deployment on natural gas prices in New England
Easing the natural gas crisis: Reducing natural gas prices through increased deployment of renewable energy and energy efficiency