Natural gas is commonly thought of as a fuel used to power gas stoves and heat homes during cold weather. However, the discovery of and ability to extract pockets of natural gas from shale rock formations has made gas supplies more abundant and dramatically lowered prices, meaning gas is being used more often to produce electricity. As more power providers consider using natural gas to fuel their generators, PJM and other grid operators are working with the natural gas industry to make sure the fuel is available when it’s needed to produce power.
Compared to a coal generator, which can stockpile its fuel on site, a natural gas generator needs to have its fuel delivered “just in time” through interstate pipelines. Because natural gas can’t easily be stored, a generator needs to determine how the pipeline company in its region will deliver the fuel. Pipeline companies offer two types of transportation service: firm and interruptible.
When a generator chooses to use firm transportation, it pays for guaranteed gas delivery at a predetermined rate.
Many generators instead choose to use interruptible transportation because they don’t have to pay for gas delivery service they may not need. While this is a less costly option, it also means that the natural gas may not be able to be delivered when it is needed because gas pipeline customers with firm service have a higher priority.
Gas becomes less available to generators during cold weather because the fuel must first be used to heat homes and businesses (that use natural gas for heat). Similar to how high electricity demand can strain transmission lines; high demand for natural gas can cause constraints on pipelines. In this kind of situation, interruptible gas service to generators can be interrupted.
When a natural gas generator can’t operate, it means tighter power supplies when the need for electricity is critical. Because of this, PJM and other grid operators are working to coordinate between the electricity and natural gas industries to make sure there is enough gas available to fuel generators when needed.