The Value of Storage: Today Gas, Tomorrow Electricity?

Fortnightly Magazine - September 15 1996
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Open-access economics make stored energy something you can bank on. For natural gas and electric power.You can't store electricity, right?

The old shibboleth to some extent is literally true. The electric industry appears different from the natural gas industry in that demand must be matched immediately with production. No viable location comes to mind to put away some of that extra power until it is needed. But literal truth is not necessarily the whole story. Competition has a way of changing perception.

Gas storage acquired a new role after the Federal Energy Regulatory Commission (FERC) issued Order 636. Deregulation will do the same on the electric side. The roles and uses of electricity storage are likely to change in ways similar to changes already seen on the gas side.

Gas

Storage: Booming

Gas storage fields are now used more consistently throughout the year, as reflected by the increasing numbers of gas-injection and

-withdrawal transactions per field.1 Gas consumers and distribution companies now augment traditional seasonal storage with services like daily and monthly supply balancing and price hedging. They want services that help them resolve imbalances quickly and enable them to profit or protect themselves from short-term changes in gas commodity and transmission prices.

Demand for increased working-gas capacity and daily deliverability has altered the development of storage facilities.2 Historically, most storage facilities made use of depleted gas and oil fields. Now, salt-cavern facilities account for 68 percent of proposed additions to withdrawal capacity, as compared to 10 percent of total withdrawal capacity in 1993.3

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