As pressure mounts in many US cities and states to ban new natural gas uses and enact electrification mandates, gas utilities face increasing uncertainty. In a new series, “The Future of Gas Utilities Series: Transitioning Gas Utilities to a Decarbonized Future,” economists at The Brattle Group outline the need for gas utilities to become proactive, innovative participants in a clean energy future, providing details on how they can develop long-term strategies now to navigate the transition in a fiscally and socially responsible way.
The three-part series centers around three building blocks for gas utilities’ transition:
- A framework for how gas utilities can assess risks and opportunities related to energy sector decarbonization
- Strategies for growing business during the transition
- Practical steps for implementing these strategies and solutions
Part one of the series, “Assessing Risk,” released today, identifies several key challenges that traditional gas utility business models must confront as electric heating outpaces gas heating adoption and regulators or political bodies increasingly question the role natural gas could play in meeting climate policy goals. These risks, however great, can be turned into opportunities, the Brattle authors note. This will require identifying comparative advantages for the gas industry in likely infrastructure and energy service needs, targeting critical market niches, developing new planning tools, and making several operational and regulatory adjustments so they can prepare for and thrive during the transition.
“With approximately $150–180 billion of unrecovered gas distribution infrastructure at risk, utilities will need to continue to invest in existing systems to meet safety and reliability requirements, even in the face of managed, declining gas demand,” shared series coauthor Josh Figueroa, a Brattle Associate. “To avoid a potential ‘death spiral’ trend that will increase energy bills and push even more customers to convert, gas utilities must create adaptive, long-term business strategies that mitigate emerging risks and make them an enabler of the energy transition through proactive and innovative approaches.”
Parts two and three of the series will be released in the coming months, and will be available on Brattle’s website. The series will culminate in a symposium – bringing together Brattle and industry experts to debate key challenges and opportunities facing the gas industry – in late 2021.
“The Future of Gas Utilities Series” is authored by Principal Frank Graves; Associates Josh Figueroa, Dr. Long Lam, and Dr. Kasparas Spokas; Senior Research Analysts Tess Counts, Maria Castaner, and Katie Mansur; and Research Analyst Shreeansh Agrawal.View White Paper