Thoughtful Pathways. Examining Natural Gas and the Cost Implications of Policy Driven-Residential Electrification

Transcription

1 Thoughtful Pathways Examining Natural Gas and the Cost Implications of Policy Driven-Residential Electrification Chris McGill VP, Energy Markets, Analysis and Standards June

2 Implications of Policy-Driven Electrification of Residential Space and Water Heating Key Questions the Study Addresses Would policy-driven residential electrification actually reduce emissions? How would policy-driven residential electrification impact natural gas utility customers? What would be the impacts on the Power Sector and Transmission infrastructure? What would be the overall cost of policy-driven residential electrification? 2

3 Key Messages. 1. Natural gas is a critical residential energy source: Residential natural gas demand in January is more than twice electricity demand in July. 2. Total GHG reduction potential from policy-driven residential electrification is small: From 1 to 1.5% of US GHG Emissions in Policy-Driven Electrification will be burdensome to customers: Average residential household energy costs (utility bills and equipment/ renovation costs) increase by 38 to 46 % - National average of $750 t0 $910 per year in direct consumer costs. 3

4 Key Messages 4. And to the economy The total increase in energy costs range from: $ 590 Billion to $ 1.2 Trillion (real $2016) 5. With significant impacts (and costs) on the electric sector: $ 150 to $ 425 billion in investment in new generating and transmission assets. 6. Policy-driven residential electrification would be a very costly approach to emissions reduction: $ 572 to $ 806 per Metric Ton of CO2 reduced - very high relative to other GHG reduction options. 4

5 Study Results Greenhouse Gas Emissions Residential Households Electric Generation Market Renewables-Only Annual GHG emissions reduced by 93 Million Metric Tons of CO 2 by 2035 (1.5%) 56.3 million households converted to electricity $760 billion in energy & equipment costs Direct consumer annual cost increase of $910 per household 320 GW of incremental generation capacity required at cost of $319 Billion $107 Billion of associated transmission system upgrades Market-Based Generation Annual GHG emissions reduced by 65 Million Metric Tons of CO 2 by 2035 (1.0%) 37.3 million households converted to electricity $415 billion in energy & equipment costs Direct consumer annual cost increase of $750 per household 132 GW of incremental generation capacity required at cost of $102 Billion $53 Billion of associated transmission system upgrades Total Cost of Emission Reduction Cost per Ton of CO 2 Total costs increase by $1.19 Trillion $21,140 per converted customer $1,420 per year increase in annual energy cost Each ton of CO 2 reduction costs $806 Total costs increase by $590 Billion $15,830 per converted customer $1,060 per year increase in annual energy cost Each ton of CO 2 reduction costs $572 ICF

6 Trillion BTU The U.S. Relies on Natural Gas to Meet Energy Requirements During Peak Winter Periods U.S. Peak Month Energy Usage , Residential Commercial Industrial Electricity July Natural Gas January ICF

7 Annual Per-Household Costs ($2016) Residential Electrification is Costly to Consumers and to the Economy $3,930 $2,760 Incremental Cost of Electrification $1,960 $1,740 $1,240 $1,683 Increase $1, $ $130 $ New York New England Plains Midwest East Coast Rockies South Texas West U.S. Total Average Annual Per-Household Cost from Power and Transmission Costs Annual Households Direct-Consumer Costs per Household Pre-Electrification: Average Household Annual Household Energy Costs ICF

8 $2016 per Metric Ton of CO2 Residential Electrification is a Much More Expensive Approach to Reducing Emissions than other Available Alternatives Emissions Reductions Costs for Alternative Approaches to Reducing CO2 Emissions 1, $572 to $ $-345 to $5 $4 to $16 $15 to $86 $47 to $72 $ Transportation - Fuel Efficiency Measures Power Sector GHG Credits (2018) Renewable Natural Gas New York Social Cost of Carbon Transportation - Low Carbon Fuel Standard Residential Electrification ICF

9 Policy-Driven Residential Electrification is an Expensive Option for Emission Reductions Region Cost of Emissions Reduction (Discounted to 2023) ($2016 per Metric Ton of CO2) Renewables-Only Case: Cost of Net Emissions Reductions Market-Solution Case: Cost of Net Emissions Reductions Units East Coast Midwest N/A* Not Modelled New England N/A* 1,081 New York 8,784 6,450 Plains 230 Not Modelled Rockies 794 Not Modelled South Texas West Total *No emissions reductions within this region in the Renewables-Only Case ICF

10 Emerging gas technologies can make substantial and cost-effective contributions to GHG reduction goals ~100 Innovative Gas Technologies for Residential / Small Commercial identified in our global search 25-40% GHG reduction potential on a customer basis by integration of these technologies and other efficiency practices 60-80% GHG reduction sufficient to meet COP 21 goals with inclusion of future CHP technologies and Renewable Gas Policy goals for sustainable energy can be achieved at significantly lower consumer cost through integrating innovative gas solutions into long-term resource planning, while offering customers more choice and improved affordability, reliability and comfort. Gas technologies can enhance energy system reliability (system-wide and as a local backup) and efficiency, while reducing the need for new electric generation and T&D infrastructure and preserving the future value of gas infrastructure. Electric technologies will also improve, and are supported by incentives, but their GHG impacts depend on the generation fuel mix. In some regions electrification may increase GHG emissions through the 2030s. Enovation Partners, May 2018.

11 Innovative technologies were assessed, prioritized and aligned with relevant end use pathways High priority technologies by major end use 68 Low-cost residential gas absorption heat pump (GAHP) combination Condensing furnace Transport Membrane Humidifier (TMH) Tankless water heater - Maintenance-free approaches for tankless water heaters Solar-assisted heating - PV assisted domestic hot water heater (potable) Unplugged power burners - Two- Phase Thermo-Syphoning (TPTS) technology Combined Space and Water Heating Systems* Ozone and cold water washing High production fryers Boilerless steamer - Multistacked convention steamer for high volume cooking Combination steam and heat oven IoT thermostats (i.e. Nest, Honeywell) Building envelope (insulation, windows, building materials) Demand controls for HW systems Thermostatically controlled low flow shower head Solid oxide fuel cells* Micro CHP gas recip, sterling engine* Fuel cell electric vehicles (hydrogen) Commercial CNG vehicles Note: All technologies were independently evaluated and scored by several SMEs; evaluation criteria primarily considered GHG impact and time to market; aggregated scores were consistent among experts and robust against multiple weightings; * designates technology with multiple end-uses, but listed only once. Enovation Partners, May 2018

12 Electrification of residential space and water heating may have significant impacts on: Consumer Costs Infrastructure Requirements Electrification of residential space and water heating may not have significant impacts on: Greenhouse Gas Emissions Natural Gas Demand

13 Questions? Chris McGill VP Energy Markets, Analysis and Standards American Gas Association 13