The competition between renewables and natural gas for a place in grid operators’ hearts is resolving, and the new peace potentially sets the stage for a rapid advance in the fight for a cleaner power supply.

Two years ago, new shale reserves of natural gas, the fossil fuel that creates the least greenhouse gas emissions, were not yet widely available, and electricity demand was increasing, so the price of gas remained high. At the same time, the implenentation of public policies like renewables standards and feed-in tariffs began a boom in wind andsolar increasing supply and lowering prices.

Renewables began to replace natural gas as a utility choice, according to Saya Kitasei, a MAP Sustainable Energy Fellow at the Worldwatch Institute and author of Powering the Low Carbon Economy: The Once and Future Roles of Renewable Energy and Natural Gas.

 “Rather than displacing the dirtiest resource,” Kitasei explained, “renewable energy was actually displacing the relatively cleaner fossil resource.” But, Kitasei added, “Prices of natural gas have come down since mid-2009.”

Transmission system operators in the U.S. and around the world have, therefore, begun more effectively to integrate larger portions of renewables-generated electricity onto the grid by using natural gas’s flexibility to balance the renewables’ variability.

IF U.S. natural gas shale reserves, newly accessible through advanced hydrofracturing (“fracking”) and horizontal drilling techniques, prove abundant, and IF the new drilling techniques prove to be environmentally safe, and IF drilling costs don’t drive the market price of natural gas up too high, then a partnership between natural gas and the variable renewable energies holds the potential to end grid reliance on coal within decades, according to the report.

“The need to mitigate global greenhouse gas emissions is so dire that we should really be concentrating our firepower on the dirtiest resources -- and that’s coal,” Kitasei said, “Natural gas and renewable energy can collaborate in the service of that cause.”

A future electricity supply of 50 percent or more renewables depends, Kitasei said, on utilities shifting from coal to natural gas. “That is the lesson we see from Colorado,” she noted, where “a very aggressive renewable portfolio standard led to a real increase in the amount of wind they were bringing on to the grid. But rather than adapt the rest of their electricity system to be more flexible so that it could accommodate that wind, it still had a lot of old, inefficient, base-load coal plants.”

The state had to enact new legislation, Kitasei said, requiring utilities to replace coal with natural gas “so that they can have a system in the future that will be more friendly to increasing wind levels.”

Policymakers, Kitasei stressed, must think about the impacts of renewables policies in terms of the whole system, and system operators must think about the burdens of 'cheap' coal on the whole system.

“Natural gas is certainly not the only solution that can add flexibility,” Kitasei added. “There are things like energy storage and demand-side response and also things like increasing your load balancing area and building new interconnections so that you can import and export electricity.” But natural gas, she said, “can respond rapidly to changes in the electricity system’s needs” and “can be used in a range of different scales” from a basement generator to a utility-scale power plant. Natural gas therefore seems a natural partner “to the diverse flexible grid” that the renewables’ variability requires.

Natural gas can only successfully partner with renewables, however, if it proves to be environmentally safe. Many in the environmental community see fracking as a threat to clean water. Kitasei and Worldwatch Institute do not. “I would say we are cautiously optimistic,” Kitasei said. “A lot of the accidents and incidents that we’ve seen,” she explained, “appear not to be the result of hydraulic fracturing itself.”

Better well construction, oversight of wellhead operations, and enforcement of existing standards are needed, Kitasei said, if natural gas is to be extracted sustainably. And questions are justified, she added. “But nothing that I’ve seen in the last few years suggests to me that there is some fatal problem with hydraulic fracturing.”

Price volatility may continue to be a bane, Kitasei said, citing a quote in her report from Duke Energy CEO Jim Rogers, who called natural gas the “crack cocaine” of an electricity sector long habituated to cheaply and quickly built natural gas plants that become hard to withdraw from when the price of natural gas spikes.

But Kitasei said her research suggests natural gas price volatility will not be as severe a problem going forward because of larger, more diverse supplies and the need for flexibility in power systems that are aggressively adding renewables.

Skeptics have doubts about the extent of the shale reserves. But Kitasei and her research partners “think the extent of coal reserves have been overestimated in a lot of the world, including China, and the amount of coal that’s left in the ground can be measured in decades, not in centuries.” U.S. shale reserves, she said, are “on the order of 90 or 100 years of gas in the ground in these formations.”

Kitasei has now begun thinking about the implications “for countries like China and India” because they are now making decisions that “will either put them in the position of having very coal-dependent grids, even as they try to bring on a lot of renewable energy” or “start them on the pathway of much more flexible generation.”