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Tackling Energy Poverty in the Age of Gas — Q&A with Michael Farina of GE

Natural gas can provide fast and flexible power to people who need it, with the right policies in place.

 

World supplies of gas are increasing, and so is global demand for electricity. In this new “Age of Gas,” the challenge is to ensure steady power access to people around the world — especially in underserved regions of the world where a fifth of the population still lives without electricity — and do it in a sustainable way.

While renewables are expected to continue to play a bigger role in the energy mix of emerging economies, gas represents a cost-effective and flexible alternative that emits less greenhouse gas than other fossil fuels, according to “Gas to Power,” a new report from GE that lays out policy recommendations for countries seeking to capitalize on the growing availability of gas.

“The Age of Gas is about the flexibility of natural gas to serve a lot of different uses within the energy economy, which is what make it attractive for developed economies and emerging markets,” says Michael Farina, Market Development Director, GE Gas to Power

While gas can play a key role in addressing countries’ energy challenges, there’s a lot more that policymakers and regulators can do to help bring the resources online faster, says Farina, who co-authored the report. By creating a stable environment, countries can support the development of resources, infrastructure, markets — and innovation.

“It’s going to be a challenging road ahead. But I’m excited about it, it’s a pretty meaningful time for technology to make a difference,” says Farina in the interview:

 

You’ve described the current era of growing supply and demand for natural gas as the “Age of Gas.”  What’s behind this new energy era, and what are the implications?

The Age of Gas is about the increasing diversity of gas supplies, and this idea that the networks are expanding and going to be growing even faster in the next decade. On the supply side, you have this abundance of gas supply that’s showing up in a lot of different places — from these large, offshore gas fields to the enormous shale resources that have been discovered in North America.

On the demand, side you have these institutional factors that make it hard to develop large-scale power plants and you have a proliferation of technologies on the renewable side and gas side that make it more possible to go with smaller, more distributed options. So the Age of Gas is about the flexibility of natural gas to serve a lot of different uses within the energy economy, which is what makes it attractive for developed economies and emerging markets.

 

Access to electricity remains a problem for people in many parts of the world. How can natural gas help to meet energy needs for underserved populations — whether through mega-projects or off the grid.

The traditional large-scale models often struggle in parts of the emerging markets — they either work too slowly or lock you into a single type of solution. Gas has the diversity, scalability and a level of sustainability — you can check a lot of boxes.

Ideally, you would have diversified sources — including the ability to bring on renewable supplies — and everything would be coordinated and optimized. But what you often see is that people are doing the best they can, and gas is often a real pragmatic solution. It helps in terms of domestic development, it helps in terms of relatively fast energy on the grid, and it can support these other larger-scale investments — reliable power, flexible power, backup to seasonal or renewable power.

 

What impact is the drop in oil and gas prices having on the cost-competitiveness of gas, and do you expect gas to remain an affordable source of power?

Yes. Oil and gas are commodities, so they are going to respond to price signals and market fundamentals. Traditionally, oil and gas prices moved together. However, as oil prices have been volatile recent years, gas has increasingly disconnected, moving on its own fundamentals in various regions.  The commodities remain connected, but clearly, you can look out 20, 30, 50 years and say, we think lots of the incremental energy needs of world can be met with renewables, energy efficiency, conventional gas, and other shale-based resources. This should keep gas an affordable source of power.

Now, you have to get the institutions and structures in place to develop it in the right way. It can be challenging. Gas infrastructure is more expensive, and it’s a lower density fuel. So there’s an inherent disadvantage to oil, which has a high energy density, or coal, or which is widely available at a low cost and is easy to pile up next to your plant.

So much of the story around natural gas is enabling these networks. What’s remarkable is, if you can get some of these infrastructures in place, it reduces the incremental cost of bringing on new consumers or accessing new supply.

 

What more can be done to help ensure a stable supply of gas — what role can governments play in ensuring the right conditions for development and transport?

Gas is an extremely regional commodity — unlike oil, which has an international footprint. So the specific recommendations are very dependent on the region you’re in.

But there are some general things we see. Having a well though-out policy around gas and transparency is obviously important. One thing that’s extremely challenging is how you manage the pricing issues, especially in emerging markets — where you’re trying to keep prices as low as possible to certain classes of consumers, though not so low that it stifles the industry.

You are starting to see this evolution from a very administered pricing to a much more flexible approaches, in particular as you start to see the interaction of domestic and international supplies. So one of policy recommendations is to be able to understand how the supply mix is changing, and adjust those policies in a way that makes sense to the country.  For gas to power projects, the key is to drive alignment across a number of areas including, regulatory, financing, pricing and tariff policies, and management of state-owned entities and local stakeholders.

 

In the paper, you discuss some of the technological advances that have made gas such a flexible option for power generation — whether distributed power, LNG, etc. How much faith do you have in the potential of technology to help meet the world’s power needs?

Nobody thinks energy markets are becoming less complex, so technology is a big part of the solution. We see tremendous growth in young populations looking for opportunities. The energy industry must deliver to unlock broader economic progress. We all know there are huge constraints on capital and resources. Efficiency is critical.

But the technologies are available, you’re seeing the integration of complex systems, serious attention on modular and scalable solutions, adoption of information technologies, revamping of supply chains, and increasingly fuel flexible generation. The developed world is evolving toward a centralized grid, with all these distributed systems embedded around it — solar system, islands of cogeneration. In other places, you’ll start with distributed solutions and then link larger systems together over time.

When you think about how many people are in the world, and how we’re going to get all this productivity — gas and electricity are at the center of that. These challenges are driving innovation.

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(Top image: Courtesy of Chris New)

 

Michael Farina is Market Development Director for GE’s Global Gas to Power unit.

 

 

 

 

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