The marriage of natural gas and microgrids is greening manufacturing

The surge in production in natural gas, which not long ago was thought in short supply, has transformed electric generation, allowing it to be cleaner and more efficient. The main beneficiaries are manufacturers, which are voracious consumers of energy, but which now can choose where to get it – from utilities, or by generating it themselves.

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Consider Procter & Gamble‘s factory in in Wyoming County, Pa., which takes advantage of a type of onsite generation called “combined heat and power,” a process that yields both kilowatt-hours and useful heat as a byproduct. The plant, which produces Pampers diapers and Charmin toilet paper, draws on natural gas from the Marcellus Shale formation, improving the company’s finances and its environmental record.

Procter & Gamble PG +0.06%’s onsite operations now are more efficient than if it had bought power from central-station utility generators, which lose energy as it travels through the transmission network. In fact, conventional generation has an efficiency rate of about 51 percent, whereas the CHP units like the ones used by the consumer product maker can achieve 75 percent, says ICF International.

About 82,000 megawatts of installed onsite CHP now exists across the country at almost 4,000 industrial and commercial facilities, adds ICF. That’s about 8 percent of the U.S. electric generation base.

Still, ICF says that this on-site generation avoids more than 1.8 quadrillion Btus of fuel consumption each year, which is the equivalent of eliminating 40 coal plants that generate 1,000 megawatts each. And the potential is real, adds ICF, for on-site gas-fired generation to expand to reach 130,000 megawatts of capacity, given that shale gas development has increased 14-fold since 2005. The clean factor then multiplies.

“Onsite generation is inherently more efficient because you don’t have line loss, or the efficiency loss from transporting the electrons,” says Michael Burr, head of the Microgrid Institute. Among those building localized microgrids for onsite power generators are Fuji Electric Co., GE Power & Water and Honeywell International HON -0.5%.

To be sure cost is a deterrent. Central generation is notably less expensive per kilowatt than that onsite generation, which is at the core of the recycling process. However, with a big plant, there’s a need for transmission and distribution — all of which adds to the expense of building a central power facility and which makes localized power production more attractive.

Regardless of whether manufacturers buy their electricity from utilities or they generate it themselves — distributed through localized microgrids — they have emerged as winners. That’s because of abundant shale gas supplies, which are helping to reduce their huge energy bills and giving some of them a feedstock to produce their finished products.

Even more significantly, natural gas is cutting into coal’s market share. That has worked to reduce overall emissions levels — everything from sulfur dioxide to nitrogen oxide to mercury, and even carbon dioxide. The focus has now turned to ensuring a safe and well-regulated drilling process.

But why can’t wind, solar, and other sustainable resources take away the preponderance of market share from coal and natural gas? One reason – customers today can decide for themselves what energy to use, based both on availability and cost. Currently, natural gas retains a distinct cost advantage over other energy fuels in many markets.

That said, natural gas also is considered a partner with green energies. After all, the wind isn’t always blowing or the sun always shining and so electricity must also be generated from other, more dependable sources. Electricity storage of renewable energy has potential, but for now it’s not commercially viable. Meanwhile, natural gas is capable of running around the clock, ramping production up and down quickly to respond to availability of renewables.

The MIT Energy Initiative, which the current Energy Secretary Ernest Moniz once headed, has emphasized that natural gas’s ability to give wind and solar the push they need to overcome their logistical weaknesses makes it a natural supplement to the growth of renewables.

Natural gas has improved the nation’s outlook by increasing industry and manufacturing’s competitiveness, reducing overall emissions and contributing to the potential growth of wind and solar energy. But it is not an environmental panacea. It is, though, the linkage between the coal age and the sustainable age.

The natural gas revolution “provides the best example of how quickly we have turned on a dime,” says former Energy Secretary Abraham, in an interview with this writer. “It has created an entrepreneurial environment that benefits the economy and the environment.” And companies like Procter & Gamble can attest to that, with other manufacturers to follow its example.

http://www.forbes.com/sites/kensilverstein/2015/04/19/the-marriage-of-natural-gas-and-microgrids-is-greening-manufacturing/?ss=energy