Smart Energy Use

Balancing act: Natural gas and electrification

Advances in electric technologies are creating new opportunities for beneficial electricity use. In a 2018 report ― New Sources of Utility Growth: Electrification Opportunities and Challenges ― Massachusetts-based The Brattle Group said that greater electrification could lead to “significant, potentially revolutionary changes” in the transportation and heating sectors.

For public power utilities that provide multiple services, including natural gas, the push for electrification can be a balancing act in helping customers make energy choices based on cost, efficiency, and the relative carbon footprint of current technologies.

Changing demand

The Los Alamos Department of Public Utilities in New Mexico does not expect a major impact on its natural gas service as a result of electrification. Los Alamos is a mountain community where it gets cold at night. So, most customers heat with natural gas. The utility has easy access to the fuel, so rates are very competitive, said Steve Cummins, deputy utilities manager. Still, “demand for natural gas is flattening,” said Philo Shelton, utilities manager. And, he added, the demand might decline. But that’s because customers are likely to upgrade their furnaces, which would use less natural gas as a result.

Customer electricity use could get a boost from a growing demand for cooling systems, Shelton said. “As our summers get warmer, we’re seeing customers add heat pumps and, with them, mini-split systems.”

In addition to cooling, the utility expects electricity demand to rise for a couple of reasons. One is the growing use of electric vehicles, and the other is the electric demand from the U.S. Department of Energy’s Los Alamos National Laboratory. The laboratory, which purchases approximately 80% of the utility’s output, has a “very aggressive load forecast,” said Cummins.

Texas-based CPS Energy also expects that natural gas consumption for residential customers will decrease over time as natural gas appliances become more efficient. A study done by CPS Energy between 2009 and 2012 showed significant reductions in residential gas use with high-efficiency (90%) gas furnaces. The study also showed that combining natural gas, electricity, and solar photovoltaics in the right way would result in a predictable electricity usage pattern that would put less stress on the electric distribution system.

As for future predictions, CPS Energy said that commercial customer gas services may increase with the introduction of on-site resiliency services. Over the long haul, natural gas-based resiliency services are likely to be replaced with renewables and energy storage as the costs of these technologies come down.

A balanced approach

CPS Energy said that increased electricity use tends to decrease residential and commercial natural gas use, but more natural gas will be needed for electric generation to meet the increased demand for electricity. In addition, more electric infrastructure will be required to accommodate the additional load.

The public power utility views natural gas as an essential source of energy and presents it as an option to customers. “Our business strategy is to take a balanced approach with our customers in mind,” said Paula Gold-Williams, the utility’s president and CEO.

High-efficiency natural gas appliances produce fewer carbon emissions and are lower in cost to operate for today’s mix of technology and fuels. In addition, natural gas is in abundant supply in Texas, as it is in other parts of the country. With infrastructure in place, natural gas offers CPS Energy’s customers a safe, reliable and affordable energy source for space heating, cooking, water heating, and clothes drying. 

CPS Energy offers rebates on gas water heaters, gas clothes dryers, gas cooktops, and gas stoves to both its commercial and residential customers. It also tries to help customers see the relationship between natural gas and their electricity bill. The utility mentioned that when customers are able to use natural gas appliances, they can often get the same results from the appliances with lower overall bills.

Nearly all ― 94% ― of Los Alamos’ customers use both natural gas and electricity. Rather than promoting one fuel over the other, the utility promotes conservation for users of both. “We have no plans to move our customers away from the use of natural gas for heating,” said Julie Williams-Hill, the utility’s public relations manager. “But when it becomes environmentally and economically feasible, we speculate that our natural gas customers will voluntarily shift to all-electric.”

Looking beyond residential customers

Both CPS Energy and Los Alamos see potential in promoting electrification beyond residential customers.

As part of its Future Energy Resources plan, Los Alamos supports the replacement of fossil-fueled vehicles with electric ones and the construction of charging stations. “We are a gateway to three national parks, including the Manhattan Project National Historical Park, which is increasing our tourism,” said Cummins. The charging stations will be primarily for visitors, as the utility expects its customers will charge electric vehicles at home due to the small geographical area of the town.

In 2019, CPS Energy worked with Electrify America to open a direct-current EV charging station at a Walmart superstore in northeast San Antonio. The station, powered by CPS Energy, features six 150-kilowatt and two 350-kW chargers ― the most high-powered units available on the market today, said Melissa Sorola, director of corporate communications at CPS Energy.

To find out how its customers are responding to its electrification campaign, CPS Energy conducts a quarterly study through a third-party market research partner. The study measures interest in various utility offerings. With respect to charging stations, commercial customers have expressed a greater willingness to adopt than residential customers, said Sorola.

The path to cleaner power

If part of the goal of electrification is to reduce the emission of greenhouse gases, then how that electricity is produced also matters. According to The Brattle Group, utility electrification activities could become the primary path toward economy-wide decarbonization efforts.

In 2013, the board of the Los Alamos Utilities Department formalized a goal of becoming carbon neutral by 2040. A year later, it created a citizens’ ad hoc committee, with customer, business, government, distributed generation, and public school representatives. The committee was asked to define the term “carbon neutral.” Its response: The utility should, using its own resources, generate enough carbon-free power to offset customer consumption. “It was important for our customers to be involved in defining the goal and developing the road map,” said Williams-Hill.

The committee came up with a list of initiatives, including the use of battery storage and EVs, the pursuit of wind and solar purchase agreements, and the exit of ownership from two coal-fired power plants (Los Alamos plans to leave one, which provides 40% of the utility’s load, by 2022).

To compensate for the lost power from the coal plants, the committee also wanted to explore the Utah Associated Municipal Power Systems’ Carbon-Free Power Project, which will allow members to purchase power from a small modular reactor project in Idaho. Cummins said that the utility is participating in the project with an 11-megawatt subscription.

Cummins believes that a diverse generation portfolio is the best way to achieve the utility’s carbon-neutral goal. “The Carbon Free Power Project is very attractive cost-wise and operationally, complimenting additional utility-scale renewable and increasing customer-owned rooftop solar energy.”

CPS Energy’s generation planning approach, which they named Flexible Path, calls for an overall reduction in the use of traditional fossil fuels to produce electricity and a shift to an increase in renewables, battery storage technology, and other resources that will help CPS Energy provide a cleaner footprint for its community. The utility’s natural gas generation is intended to firm the intermittent resources of renewable energy ― solar and wind ― to support customer demand.

“We have to maximize our diversified generation fleet that includes, gas, coal, and nuclear, so we can support our customers and continue to provide them with reliable and affordable power,” said Gold-Williams.

The utility has the most wind and solar energy in Texas, accounting for roughly 22% of its electricity production. By 2040, the utility estimates it will generate nearly half of its power from renewables, relying less on fossil fuels. At present, natural gas ― accounting for 45% of the energy mix ― is the “bridge” that firms the load provided by intermittent renewable resources.

“Our core business initiative is to responsibly manage a diverse and dynamic power generation portfolio,” said Gold-Williams. Over the years, as new technologies have emerged, the utility has positioned itself and its community to benefit from those technologies, while providing its customers with affordable and reliable energy services.