North American Energy System Responses to Natural Gas Price Shocks

Maxwell Brown, Sauleh Siddiqui, Charalampos Avraam, John Bistline, Joseph Decarolis, Hadi Eshraghi, Sara Giarola, Matthew Hansen, Peter Johnston, Saroj Khanal, Anahi Molar-Cruz

Research output: Contribution to journalArticlepeer-review

15 Scopus Citations

Abstract

As of 2020, North American natural gas extraction and use in the electricity sector have both reached all-time highs. The combination of North America's increased reliance on natural gas with a potential disruption to the natural gas market has several energy security implications. Additionally, policymakers interested in economic resiliency will find this study's results useful for informing the implications of the energy sectors' long-term planning and investment decisions. This paper evaluates how both the electricity and natural gas sectors could respond to hypothetical gas price shocks under different system configurations. We impose unforeseen natural gas price shocks under reference and alternative configurations resulting from a renewable generation mandate or variations to renewable capacity costs. Results from several different models are presented for the electricity and natural gas sectors separately for Canada, Mexico, and the United States. Generally, the US becomes more (less) reliant on electricity imports from Canada given a high (low) gas price shock but increases (decreases) exports to Mexico. The renewable mandate is demonstrated to buffer electricity price increases under high price shocks but price reductions under the low price shocks are dampened given less flexibility to take advantage of the low-priced natural gas. The United States is demonstrated to reduce natural gas production and net exports with high natural gas price shocks given a reduction in demand.

Original languageAmerican English
Article number112046
Number of pages11
JournalEnergy Policy
Volume149
DOIs
StatePublished - 2021

Bibliographical note

Publisher Copyright:
© 2020

NREL Publication Number

  • NREL/JA-6A20-75535

Keywords

  • Energy security
  • Price shocks
  • Resilience

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