http://www.eia.gov/energy_in_brief/article/renewable_electricity.cfm

http://www.cmegroup.com/trading/energy/natural-gas/natural-gas.html

We aren’t building new NG plants at any appreciable rate. That activity stopped a few years ago.

If gas moves to $5, which the futures market thinks it will, it will produce more expensive electricity than wind, solar, geothermal and probably tidal.

Gas plants, being dispatchable, will sit idle more of the time. And that will increase their LCOE. It will make stored renewable more competitive.

Fossil fuels are going to get pushed aside.

That’s the beauty of free markets.

But let’s say nat gas moves to $5 as an assumption. If we are still in need of building new gas turbines, our assumptions are likely good.

But if the call on gas fired power stagnates or falls due to a combination of factors such as lower demand due to LEDs and other energy efficiencies or renewables creating additional generating capacity, then existing gas turbines can probably run at 5-6cts/kwh. That’s the beauty of free markets. The low cost solution may come from the Demand or the Supply side.

When the price of NG rises then someone will capture and sell that NG. Of course that gets right back to my point. Natural gas prices are likely to rise, that will make it more expensive to generate electricity using natural gas, and NG-electricity will become more expensive than solar.

Drilling more = higher prices. And, as you say, it takes higher prices to get to the harder to reach stuff after the easy stuff has been burned.

Today’s price for NG is $3.44. $5 means a 45% increase in the price of NG would be required to keep the flow going.

Since fuel is the largest contributor to the cost of electricity from a CCNG the increase in NG-electricity should rise more than 50%. Correct?

My understanding is that CCNG have relatively low overnight capital costs and come on line fairly quickly which helps hold down financing costs. And their operating costs are mostly fuel.

If NG-electricity goes up from 6c to 9c then it’s about the same price as solar. Europe is now installing solar at prices which would give us electricity for well under 10c.

It seems likely to depend on how much gas is produced from wells drilled for tight oil. Nobody is drilling wells for gas nowadays, but a lot of gas is produced in North Dakota and simply thrown away because there aren’t pipelines to transport it to market.

DOE proven reserves are meaningless, and are a function of price. Price goes up; so do recoverable reserves.

There are tons of dry gas wells that haven’t been completed in places like the Eagle Ford, Haynesville and Marcellus due to low prices or lack of pipeline takeaway.

With power demand flat to declining (thanks LED lights etc) and renewables coming on line at the margin, nat gas demand could actually contract. LNG exports are a wild card.

We can find a lot of gas at $5.

I’m pretty sure that current prices won’t support the cost of new wells or refracking old ones. Prices will have to rise to that level. I don’t know what that number is, I saw an engineer post $8 but that seems high to me.

I also realize that we are now burning NG much faster than we were in 2010. Let me copy over something I wrote sometime back…
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In 2010 the EIA reported we had 2192 tcf (trillion cubic feet). But only 842 tcf was in known and proven gas fields. Another 736 tcf is ‘possible’ – there are places where we would expect to find more gas. And the final 614 tcf is labeled ‘speculative’, whatever that means.

I can’t see the sense in basing our future plans on the ‘speculated’ part, so let’s limit ourselves to the 1578 tcf that we are likely to find.

In 2010 we were burning 24 tcf per year. If we continued to burn at that rate we would exhaust our supply in 66 years. But we’ve increased our burn rate.

In 2010 the US generated 988 TWh (Terawatt hours) of electricity using natural gas. In 2012 that number increased to around 1,470 TWh. A 49% increase in burn rate. If we increased our annual burn rate by 50% over 2010 rates then our ‘known, probable and possible’ supply runs out in 44 years.

If we export and start using NG on large scale for transportation isn’t it likely that we’ll burn/export at a significantly higher rate than 36 tcf?

Then in January 2012 the US Department of Energy lowered the 842 tcf ‘known and proven’ to 482 tcf based on more detailed information provided by gas explorations in shale deposits in the preceding year. Wells are slowing production much faster than was expected. That’s a 43% drop.

So, double the 2010 burn rate and you cut our supply from 66 to 33 years. Downgrade the supply by 43% based on recent well findings and we’re now at 19 years. That is not a long future for natural (and coalbed) gas.
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Two, three years from now we’ll know more about well lifespan. We’ll have experience with higher burn rates. Were I forced to bet, my money would be on NG prices rising significantly.

Everything I read here says that the cost of solar continues to drop rapidly. So my question is why invest today in something with a 10 year or more payout when I can supposedly invest in something in 2-3 years that may have a five year payout? If those assumptions are correct, then disciplined investors will choose the second alternative all day long.

Tell me what I’m missing.

Some of it comes from nuclear reactors we built and paid for in the past. No time machine, so we can’t go back build and pay off more.

Some of it comes from coal. But that energy is only cheap if we ignore the health and environmental damage and pay those costs with tax and health insurance dollars. If you think we should be subsidizing industry in that fashion, at least be up front with it.

Some of it comes from existing, paid off dams. That old time machine problem again.

Some of it comes from natural gas. If you’re in the fossil fuel business you know the price of NG will rise.

OK, going forward. We’re not going to build any more coal plants and we are going to close a lot. That may not be a good idea in your desire to put cost of energy to industry ahead of everything else, but it’s what is going to happen. And that means we need new capacity.

Not nuclear or dams. Too expensive.

Our currently cheapest ways to make electricity are wind (6c/kWh) and natural gas (5c/kWh). Median price from the EIA.

http://en.openei.org/apps/TCDB/

The cost of wind generation is going down. The cost of NG is going up. Wind farms built now and producing for 6c will continue to produce for ~5c over the next 30-40 years. CCNG plants built now and producing for 5c will see their costs rise with the cost of fuel.

The cost of solar is dropping. Solar is now being sold to the grid in the SW for around 10c/kWh. (That’s with subsidies removed from the contract price.) Peak power from gas turbines often runs far higher and due to merit order pricing pulls the cost of all power higher. Even building non-merchant gas turbines means a price of 7c/kWh. And that price will rise with the cost of NG. In the next few years the cost of gas will rise and the cost of solar will fall below that of NG turbines. And those solar prices will be locked in for 40+ years.

Other countries are installing wind and solar. They are almost certainly going to have lower energy prices than will the US if we sit back and let them get further ahead of us.

2012: 27.9 TW-h of 482.8 TW-h
2012*: 14.3 TW-h of 244.1 TW-h (1st half of year)

http://www.ise.fraunhofer.de/en/downloads-englisch/pdf-files-englisch/news

You said: “Where govt typically goes wrong is when it tries to scale up either an idea who’s time has not come (early solar, fo ex) or a bad idea (ethanol).”
About ethanol, yes I agree, although Kohsla is right it has kicked off other, better biofuel efforts.
About solar, I totally and completely disagree. We owe a huge debt of gratitude to the German people for push solar so far down the path of development. I voted for Obama twice, specifically because of his support for solar, wind, and EVs/PHEVs. His support has paid off beautifully …and the exponential graph above shows. There is a clear learning curve with solar of about 18% reduction in price per doubling of production volume (although this seems to increased recently). That is not shown graphically here, but those costs have dropped to the point where solar can no longer be stopped.
Early solar development is an exceptionally poor example of government support going wrong. The level of solar tech we are at today is simply amazing. All but the very blind should be able to see that this is a disruptive energy tech. It’s obvious to me and others, the data speaks, what the hey is wrong with some of you people?