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Resilience is the 'next frontier' for gas-electric coordination, experts say

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Resilience is the 'next frontier' for gas-electric coordination, experts say

The Federal Energy Regulatory Commission, regional transmission operators, and energy companies must continue to improve the strength and efficiency of the U.S. energy grid by meshing the gears of the electric power generation industry and the natural gas industry, a panel of industry and regulatory experts said at the winter meeting of the National Association of Regulatory Utility Commissioners in Washington, D.C.

"The next frontier is 'resilience,'" Tony Clark, senior adviser to the law firm Wilkinson Barker Knauer LLP, said as he introduced the Feb. 11 panel on gas-electric coordination.

"Resilience" in this sense is the ability of the U.S. to reduce the severity of events that disrupt the energy grids and the ability to recover quickly from these events, according to another speaker, Nancy Bagot, senior vice president of the Electric Power Supply Association. She said the power and gas industries have seen improvements in how they roll through times of stress, but she and others agreed there is plenty more work.

Clark said the Federal Energy Regulatory Commission, which helped the industries work more closely together while Clark served on the commission from 2012 to 2016, will continue to fine tune the energy grid.

"I see this as an ongoing matter — not one where it gets 'fixed' in one or two dockets," Clark told S&P Global Market Intelligence after the Feb. 11 panel. "There will be a number of important stakeholders along the way, but given FERC's central role in both the wholesale gas and electric industries, the commission will be dealing with it for a long while — especially given the changing nature of the generation fuel mix."

Regional players will be involved. "We have seen the evolution of the system in New England," Anne George, ISO New England vice president of external affairs and corporate communication, said on the panel. The organization has had to take temporary "out-of-market" measures to help generators get fuel during tough times in winters past, but it is focused on long-term improvements to the market, she said.

"We don't talk much about pipelines anymore," George said, citing challenges to building projects that would add gas transportation capacity in New England and New York, which controls pipeline access to New England.

Stan Brownell, vice president of natural gas business development at Argus Media and a former executive with Millennium Pipeline Co. LLC, said "coordination is really about information." There are still a number of barriers to open exchanges among power generators, pipelines and other players, including a reluctance to reveal competitive information, he said. New policies would be needed to encourage such exchanges, he said.

In another take on making the U.S. energy system more resilient, two industry research groups are looking at ways to reduce carbon emissions from transporting and burning natural gas. Arshad Mansoor, president of the Electric Power Research Institute, said energy efficiency and moving away from coal- and oil-fired power generation have helped U.S. energy-related CO2 emissions go from about 6 billion tons in 2005, which is the U.S. reference year for the Paris Climate Agreement, to about 5 billion tons in 2020. The addition of efficient electrification, including cleaner vehicle transportation, could help get emissions down to about 4 billion tons in 2030, he said.

But to drop to 1 billion tons by 2050 would require some serious technology, and the Electric Power Research Institute and the Gas Technology Institute are leading a five-year low-carbon resources initiative to get there, Mansoor said. The groups expected to pursue the initiative with $100 million in commitments from industry members, and they will also seek funding from the U.S. Department of Energy. The low-carbon technologies include a blend of hydrogen or synthetic methane with natural gas for transportation in pipelines; hydrogen gas turbines; and ways to capture, use and store carbon.

Blending hydrogen with natural gas would have costs, including significant changes to the infrastructure and operations of the U.S. pipeline industry, as well as benefits, and Clark was not sure how it would play out. "It's intriguing to me — but having said that, it's like many cutting edge research projects," Clark said after the panel. "I'd be hard pressed to tell you today whether it's a part of the ultimate solution or not."

As Clark summed up the history of the close relations between the two industries for the panel audience, "the story really begins with the advent of shale gas." Over the first decade of 2000, U.S. natural gas production kicked into high gear with the refinement of hydraulic fracturing and other production techniques that allowed to production companies to exploit tight shale formations. Cheap gas has been taking over from coal, oil and nuclear energy in power generation applications since then, and it has sometimes made it tough for renewable energy sources to compete. The power generation industry now leans heavily on gas, and the pipelines that bring the gas from production areas to markets rely on power to run, a mutual dependence that can cause problems in a disaster or even during a period of extreme cold.

After power outages and gas shortages in the Southwest in 2011 and in New England during the polar vortex of 2014, FERC issued Order 787, Order 809 and took other steps to promote greater communication between the gas and electric industries and bring their operating days and schedules into alignment. The commission has also collected information on potential improvements for the electric transmission and generation markets.