This is an excerpt from EERE Network News, a weekly electronic newsletter.

September 10, 2003

Study: Renewables, Efficiency Could Cut Natural Gas Prices

A new study by the American Council for an Energy-Efficient Economy (ACEEE) and Energy and Environmental Analysis, Inc. finds that aggressive programs to encourage energy efficiency and renewable energy could reduce the demand for natural gas enough to cause a 10 to 20 percent drop in wholesale natural gas prices. The study, commissioned by the Energy Foundation, developed estimates of the near-term and mid-term potential to implement energy efficiency, conservation, and renewable energy in each of the 48 contiguous states. Those estimates yielded a potential to reduce U.S. natural gas consumption by 1.1 percent within a year using energy efficiency, and to reduce U.S. natural gas consumption by 5.5 percent by 2008, using a combination of energy efficiency and renewable energy. By easing supply constraints, such apparently minor reductions in demand could yield significant price reductions, according to the report. The ACEEE report concludes that savings to consumers and businesses over the next five years could exceed $75 billion. See the study and press release on the ACEEE Web site.

A recent related report from DOE's Lawrence Berkeley National Laboratory (LBNL) argues that utilities should compare the cost of renewable energy to natural gas prices that can be locked in for long periods of time, rather than comparing renewable energy sources to projected market prices for natural gas. The report finds that using projected natural gas prices creates a bias in favor of generators fueled with natural gas. Another recent report finds that consumers show a slight preference to having utility support for renewable energy projects included in the rate base and paid for by everyone, rather than using voluntary premiums for green power. An opinion survey conducted as part of the study found that 55 percent of the poll respondents believed that renewable energy production should be increased, even if it costs more than other electricity production options. See the two August 2003 reports on the LBNL Web site.