Lawyer: Cost of Natural Gas Conversion May Outweigh Benefits
by Christine Stuart | Dec 3, 2012 11:16am
(7) Comments | Commenting has expired
Posted to: Energy, Environment
As soon as Gov. Dannel P. Malloy unveiled his draft energy plan for the state in October, heating oil dealers were up in arms over its assumption that expansion of natural gas would save consumers money. One energy expert says the energy plan actually says the opposite.
“The departments analysis clearly indicates that a large portion of the proposed expansion would cost more than it would save,” N. Jonathan Peress, vice president and director of the Clean Energy and Climate Change Program for the Conservation Law Foundation, said Friday.
“If you deploy the energy efficiency supported by the draft strategy then the cost of natural gas expansion further outweigh the benefits,” Peress added.
Kelly Porter, a rate specialist inside the Department of Energy and Environmental Protection, said that’s true for some “off-main” customers. Those who are more than 150 feet from an existing natural gas line.
But she said there are 217,000 on or near a natural gas main and for those customers, based on the current price of natural gas, it may be more cost-beneficial to switch to natural gas. There are still an estimated 90,000 customers who are far enough off natural gas lines where energy efficiency measures may produce larger cost savings, she said.
“I’m sure in some cases half of Connecticut residents and businesses are better off staying on fuel oil,” Porter said.
The report estimates that about 50 percent of the state’s homes are in locations that are cost-prohibitive for conversion and their energy usage also makes conversion cost prohibitive.
But that doesn’t seem to be the message being sent by Malloy, who went so far as to admit that his administration debated forcing consumers to switch to natural gas, but ultimately decided against it.
The cost of converting customers who already live near natural gas lines has been estimated at $815 million. The cost would be picked up by the customers and the utilities.
But converting “off main” customers is much more expensive, Malloy said.
“This would require approximately 900 miles of new mains and cost somewhere around $1.4 billion,” Malloy said in October when he unveiled the plan.
“This is not a radical expansion of natural gas in the state,” Andrew Doba, Malloy’s spokesman, reiterated Monday. “The expansion will put Connecticut on par with neighboring states and lower costs for consumers and businesses.”
The guiding principle of the plan is to give consumers choice, “not mandate conversion to any one specific fuel,” he added.
But others, including Peress, a lawyer who lives in New Hampshire, believe the better choice may be biofuel.
An analysis conducted by New York City this past summer shows that converting to biodiesel costs less and has more beneficial environmental impacts, Peress said.
“Biodiesel is very close to the benefits of natural gas and costs less,” he added, noting the comment would likely upset some people.
Many fuel oil dealers in Connecticut already offer biodiesel or biofuel. The Independent Connecticut Petroleum Association lists them by county on their website.
Biodiesel is made from agricultural co-products and byproducts such as soybean oil, other natural oils, and greases. Fuel oil dealers in Connecticut are striving to implement a 20 percent blend of biofuel by 2020.
Gene Guilford, president and CEO of the Independent Connecticut Petroleum Association, said at the moment customers have to specifically ask their oil company for a biofuel blend, if they want it. But that won’t be the case in the future.
In 2010, the ICPA was able to get legislation passed that called for the virtual elimination of sulfur from heating oil and, at the same time, introduced a renewable fuel mandate to it. But Guilford said the legislation tied the mandate to what other surrounding states like Massachusetts, Rhode Island, and New York were doing. He’s hoping for stronger legislation this year that gets Connecticut to 20 percent biofuel before the end of the decade.
The public hearings for the draft energy proposal are over, but public comment on the proposal is open until Dec. 14.
Tags: energy, natural gas, heating oil, biofuel, N. Jonathan Peress, Gene Guilford, Gov. Dannel P. Malloy, dh
(7) Comments
posted by: DrHunterSThompson | December 3, 2012 1:02pm
I’m glad somebody did this analysis, it never seemed to me to be economically feasible, but what do I know…...
The real issue is the volatility of natural gas. Buildings and neighborhoods blow up all the time from natural gas leaks, mistakes, etc. I’d never live near it.
HST
posted by: JAM | December 3, 2012 4:55pm
And what is required of existing furnaces and boilers to burn biofuels? Is it compatible with existing oil burners, or are upgrades/retrofits required?
posted by: Tim White 1 | December 3, 2012 9:28pm
JAM… my understanding is that just about boiler is biodiesel compatible. The bigger issue is warranties. Boilers have warranties for deisel, not biodiesel. And if you put something unauthorized in a boiler, then when something goes wrong… whether it was related or not, the warranty is often invalidated because of the biodiesel.
At least, that was a big hangup a few years ago. Even then you could’ve probably used 100% biodiesel (B100), but you also were likely to get your warranty invalidated.
As for making biodiesel, I think there’s a capacity issue. Tyson runs their truck fleet (out of Arkansas) using their own waste chick fat / skin. And you can grow rapeseed or other crops… but ultimately you need feedstock (food or plant) to produce the biodiesel. And that’s simply not going to happen. At the moment, there’s not enough agricultural land to both feed people and biodiesel factories.
Of course, biodiesel efficiencies could improve with technology… and we could see a game changer… but I’m not holding my breath on that happening.
posted by: JAM | December 4, 2012 9:55am
Thanks, Tim.
Do you know anything about the BTU content of biofuels (which I assume varies by its source)?
In the end you pay for BTU’s.
Biofuels may be cheaper, but if the BTU content is lower, the savings may be illusory.
Just curious.
posted by: stellathecat | December 5, 2012 12:54pm
I converted from oil to natural gas six months ago. The gas company covered the cost of instilation from the street to the house and I paid for converting my boiler.
I am more than pleased with my savings which will cover my costs in about one year. It is cleaner and much cheaper—a no brainer if you live near a line.
posted by: JamesBronsdon | December 5, 2012 5:55pm
Ditto. 5 years ago converted. Best investment I’ve made in my house.
posted by: Tim White 1 | December 8, 2012 3:25pm
JAM… some unreviewed numbers that I got from an MIT source…
diesel = 128 BTUs / gallon
biodiesel = 121 BTUs / gallon
I *think* the biodiesel is B100. And—based on these numbers—while using any biodiesel would obviously decrease efficiency… CT typically uses B10 or B20 at this time. And if B100 is only 5% less efficient, then using B10 would presumably be only 0.5% less efficient. So no regular homeowner would probably ever know or notice this difference. And if they did, I’m not convinced that it would have a significant impact on buying decisions. But that’s just a guess.
I mean… if a 2000 ft2 home uses 1000 gallons @ $4/gallon… that’s $4000/yr. 1% of that is $40. That’s a tradeoff that some, though certainly not all, Nutmeggers would accept.
If you wanna talk, feel free to reach me at timwhite98atyahoo. I’m in Cheshire.