As generation grows increasingly reliant on natural gas, challenges that bedevil electric utilities — peak demand and supply shortages for instance — are cropping up for local gas distribution companies in some regions. And in turn, a few gas companies are taking cues from electric demand management programs as they look for solutions.
While there are only a handful of clear examples right now, two recent reports suggest more gas utilities could embrace demand management concepts, to help ease congestion on stressed distribution systems. But while the concepts are similar between the electric and gas sectors, experts say there are important differences that create challenges.
A niche market
"Gas demand response is still pretty niche right now. It's not going to be as widespread as electric," Navigant Principal Research Analyst Brett Feldman told Utility Dive. "Electric demand response can really be used by any utility — there is always some benefit. But gas is more specific, so there's only certain areas were you have these gas constraints, typically the Northeast and California."
A recent Navigant report authored by Feldman concludes, "market trends are forcing utilities to readdress their approach to gas system planning," and identifies both gas demand response and "non-pipes solutions" — the gas sector's answer to the electric industry's non-wires alternatives — as "emerging trends."
"The gas industry is following the electric industry's footsteps in engaging distributed system solutions," Navigant's report says, while predicting gas DR and non-pipe solutions (NPS) "will change the planning process for utilities and offer new opportunities."
Similarly, a recent Brattle report called natural gas demand response an "underexplored" resource that "could also provide value by deferring or avoiding investments in the longer run." The firm estimated, for example, that deferral of a $100-$500 million gas pipeline or liquefied natural gas peak-shaving facility could save customers $10-$70 million annually.
Gas demand response "has the potential to be an important component of addressing gas supply constraints during peak demand periods," Jürgen Weiss, a Brattle principal and study co-author, said in a statement.
In New England, Brattle estimated that if demand response could reduce the region's peak gas utility demand by 10%, it could free up enough natural gas to displace up to 54,000 MWh of oil-fired generation. When gas supplies run short and utilities must continue delivering firm supplies to other customers, many dual-fuel generators switch from gas to oil when their gas supply is not available.
Freeing up natural gas to generate electricity would help make natural gas the marginal fuel on most winter days, Brattle said, "resulting in lower electric prices, and also providing added fuel security benefits by increasing natural gas supply to the gas-fired generation fleet."
Gas demand response, Brattle said, could "entirely avoid some price spikes and help improve reliability."