How non-pipeline alternatives create opportunities for distributed energy resources
If you haven’t heard the term non-pipeline alternatives, you will, as more and more US cities and states explore the carbon reduction strategy.
Non-pipeline alternatives are technologies and strategies designed to avert the need for natural gas pipelines and related infrastructure. When the time comes to upgrade or expand a pipeline, state officials ask the utility to investigate cheaper and cleaner alternatives. They aim to reduce gas use by homes and businesses in an orderly fashion that doesn’t spike prices or weaken service.
“The general direction is to move away from expansion of the system so that we don’t see it getting bigger and to start to bend the curve, so to speak, because spending on the existing system has been going up. Bend the curve and sort of bring that down in favor of alternatives,” said Mike Henchen, a principal at RMI who works in its Carbon Free Buildings program.
Which non-pipeline alternatives win?
A range of clean energy technologies can act as non-pipeline alternatives, not only distributed energy resources (DERs) but also electrification, geothermal, renewable natural gas or hydrogen. Exactly which technologies win the day depends heavily on local resources and goals. Often utilities pursue a mix of solutions.
Massachusetts made news in December when state regulators issued a landmark decision that set the stage to slow the expansion of the state’s natural gas networks. The state Department of Public Utilities (DPU) specified what alternatives it favors in the decision. Networked geothermal, a form of district energy, topped the list, followed by geographically targeted electrification. The DPU nixed hydrogen, except for certain customers, saying it won’t be cost-effective for a while, and cited the need for more study of renewable natural gas, although it left the door open for its future use. Utilities may still use these fuels, but shareholders, not ratepayers, would cover increased costs.
Elsewhere, the choices are different. Colorado regulators are open to green hydrogen and New York accepts renewable natural gas, according to Brad Cebulko, senior manager at Strategen, who spoke in a recent webinar, Not Just A Pipe Dream: Non-Pipeline Alternative Framework, Analysis and Experiences. Both states will also entertain a range of other resources, while Rhode Island honed in on energy efficiency, a common non-pipeline alternative.
In New Jersey, South Jersey Gas and Elizabethtown Gas must consider electrification as part of a newly required non-pipeline alternative evaluation. The New Jersey Board of Public Utilities issued the directive within its decision approving the acquisition of the two gas utilities by the Infrastructure Investment Fund.
In Oregon, beginning this month, Avista must evaluate non-pipeline alternatives, including electrification, before embarking on supply or distribution investments exceeding $1 million.
Several cities, mostly on the West Coast, also are looking at non-pipeline alternatives. For example, working with a $200,000 federal grant, the city of Albany, California is undertaking a pilot project to do away with a natural gas pipeline by electrifying a city block of buildings.
Best places for non-pipeline alternatives
A report published last month by E3 modeled 11 California sites, all in San Francisco’s East Bay, where Pacific Gas & Electric (PG&E) delivers natural gas. The report found that electrification could replace pipelines cost-effectively, especially in less densely populated regions — as much as 10% through 2045.
“Although this reflects a relatively small share of total distribution main miles, pipeline replacement projects represent a large share of anticipated capital expenditures over the coming decades. Thus, targeted electrification and gas decommissioning projects could reflect an important opportunity to support a managed transition for California’s gas system by reducing costs for remaining gas customers,” the report said.
Opportunities for DER providers
In some cases, gas utilities handle non-pipeline programs on their own, rather than seek outside parties through competitive solicitations. Xcel Energy went in with a “Clean Heat Plan” detailing strategies to achieve net zero by 2050, including energy efficiency, electrification, hydrogen projects, renewable natural gas, and upstream emissions reductions. Electrification offers the greatest emissions reductions in the portfolio, according to the utility’s initial filing with the Colorado Public Utilities Commission (Proceeding No. 23A-0392EG.)
Others, especially those in Northeastern states, are apt to seek proposals from independent third-party providers. New York utility Consolidated Edison uses existing relationships, competitive solicitations, and prescriptive incentives to attract electrification and gas energy efficiency projects.
Imagine, said Cebulko, an electric demand response aggregator that could theoretically electrify and aggregate buildings that act as a non-pipeline alternative.
Going out to bid offers the advantage of attracting ideas a gas utility might not consider. Imagine, said Cebulko, an electric demand response aggregator that could theoretically electrify and aggregate buildings that act as a non-pipeline alternative. “That’s a concept that a gas utility would not necessarily play in because they are not demand response aggregators in electric markets, but that could be an idea put forth by a third party.”
How targeted electrification works
Targeted electrification — the other resources favored in the Massachusetts decision — takes three forms, according to RMI’s Henchen.
In the first example, he described a newly built house that uses electrically driven heat and appliances rather than natural gas.
“Right now the utility oftentimes covers all the costs and the person building the house doesn’t really have to pay to connect. So a clear implication is that they would change the economics and sort of shift that cost burden onto the developer,” Henchen said.
Targeted electrification may also come into play when population or business growth increases the demand for natural gas in a region. To avoid the construction of more pipeline, the utility electrifies all or part of the region to keep the demand below a certain threshold.
And finally, the largest need for targeted electrification occurs when pipes get old, leak methane, and must be replaced and repaired, a costly endeavor that requires repeatedly digging up streets. “Dig up the street, take the old pipe out, put a brand new pipe in, repave the street and just go around, street by street, town by town, doing this all over the place.” This arduous and expensive process will continue for decades unless an alternative is introduced.
“What we could do instead is electrify every house on this street and take the pipe out of service, just retire it altogether. You have to be very local in your planning and say, no, it’s this street, or sometimes it’s this street and that street, but not the one next to it,” he said.
Geothermal networks: why and when
Geothermal networks, which Massachusetts regulators tagged as particularly promising, offer an alternative to heat pumps and electric water heaters. Still in the pilot phase, it’s the next generation of district heating, Henchen said.
Geothermal networking won’t work everywhere. While it might make sense for cities, it’s unlikely to work in rural areas.
Each home connects to a thermal loop of underground pipes moving a warm or cool liquid depending on the system’s needs. Homes extract heat from the loop in the winter to warm their homes and dump heat into the loop in the summer to cool their homes. “This still uses electricity, but it is extremely efficient,” he said.
Geothermal networking won’t work everywhere. While it might make sense for cities, it’s unlikely to work in rural areas.
Because geothermal networks require pipes, Massachusetts’ approach is not a true non-pipeline alternative, so the state uses the non-gas pipeline alternative instead.
The importance of non-pipeline alternatives to DER growth
Non-pipeline alternatives offer clear opportunities for distributed and clean energy. Demand reduction efforts — energy efficiency measures, demand management, demand response, energy storage or thermal storage within buildings — reduce the need for energy and, therefore pipes. Home solar and storage help offset grid demand from increased power use from electrification efforts undertaken to reduce pipeline construction.
But are non-pipeline alternatives likely to create a bonanza of opportunity for distributed energy? Probably not.
Much of the distributed energy growth underway is consumer-driven. Homes and businesses are adopting solar, storage, electric vehicles and other forms of local energy for their own reasons. Non-pipeline alternatives, on the other hand, are squarely driven by utility action. So how far non-pipeline alternatives go in encouraging distributed energy depends upon utility willingness — and regulatory requirements. Not all utilities are willing, and not all regulators will take the time to pursue the approach.
But non-pipeline alternatives do represent a recognition that centralized energy distribution is not always the cleanest and most cost-effective approach. In short, non-pipeline alternatives provide another inroad to prove the worth of decentralized energy, so it’s important to track regulatory proceedings introducing them and the actions utilities take to implement them.
Track news about non-pipeline alternatives in the Energy Changemakers community.
