Green

Will the rise of natural gas threaten solar and wind?

The end of 2010 is fast approaching, and with that have come a flurry of State of the Cleantech Union-type reports and forecasts.

What’s clear so far is this: American wind installations last quarter hit a three-year low, although there’s over 4,000 gigawatts of potential for offshore wind development, and the government is streamlining the permitting process to help spur growth. Solar appears to be healthy and poised to rise in the U.S., with large-scale solar installations for utilities expected to double each year between now and 2015. And a recent report by the Boston Consulting Group predicted that solar and biofuels would be the first renewable energies to become competitive with traditional energy sources like coal — possibly within the next five to 10 years.

But could natural gas disrupt it all? According to consulting group Kachan & Co., it’s very possible. The company forecast that natural gas — a fossil fuel will emerge to threaten solar and wind for utility green power generation. And in the next few years, the firm sees renewable natural gas — that is, synthetic natural gas created from renewable feedstocks — emerging to rival the reigning clean energies.

They’re not alone in forecasting the rise of natural gas. An upcoming report from Black & Veatch finds that coal market share will be cut in half in the next 25 years — which will be made up for by the doubling in natural gas, which is expected to rise from 21 percent of U.S. energy use in 2011 to 40 percent in 2035. And a recent Ernst & Young report found that low natural gas prices in the U.S. have made it tougher for solar and wind projects to win financing.

“We really believe that natural gas is going to be on the lips of a lot more cleantech people next year,” said Dallas Kachan, Kachan & Co.’s managing partner. “There will be more cleantech entrepreneurs and investors looking at ways to piggyback on enthusiasm for natural gas.”

Kachan also predicted more federal and policy support for natural gas, saying it is possible natural gas may be included in a federal renewable energy portfolio standard — a little ironic considering that it’s a fossil fuel, but one that’s in abundant supply, Kachan says — somewhere in the ballpark of “a few hundred years” worth of reserves.

Natural gas has the advantage of already-existing infrastructure, and it isn’t intermittent like wind and solar. While natural gas isn’t an entirely clean energy because there are carbon emissions associated with its use, it is much cleaner than coal-based energy — the “lesser of the fossil evils,” as Kachan put it.

The government does seem to be leaning in that direction. The Department of Energy last week granted a $50 million conditional loan guarantee to a natural gas vehicle company —  thanks in part to the urgings of T. Boone Pickens, a big natural gas supporter. The Wall Street Journal even speculated earlier this week that natural gas vehicles could be poised to earn the favor of China — although the country is already on the electric car warpath with a decree that five million electric cars be on the roads by 2020, with $17 billion pledged to those efforts.

Still, “T. Boone Pickens might get his way,” Kachan said.

While many major automakers and a number of startups have gone on an electric vehicle spree as of late, Mercedes-Benz and Honda have also gotten on the natural gas vehicle path. Mercedes will be leasing 70 hydrogen fuel-cell cars in California, while Honda plans to lease about 200 its hydrogen fuel-cell Clarity cars over the next three years, also primarily in Southern California.

There’s a bit of rain on the natural gas parade, though — and it’s a similar to the problem that haunts geothermal energy. Both involve drilling into the earth, and natural gas drilling companies have been faulted for spills and contaminating drinking water in Pennsylvania at the site of the Marcellus Shale, resulting in fines and a government-ordered closure of some of the drilling operations.

Kachan says he’s excited by the potential for renewable natural gas, which can be distributed through existing pipelines. While the technology is still lab-scale and years away from being commercial scale, he said startups in that space are getting tremendous interest from utilities who have to meet renewable portfolio standards.

“If utilities are able to simply write a purchase order to their gas providers and burn natural gas at their existing natural gas plants, then they don’t need to go put steel in the ground for solar and wind,” Kachan said.

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