LNG and Renewables

Apr 2020

Liquified natural gas (LNG) is the perfect partner for renewables in remote power operations.

Traditional gas pipelines require a long-term commitment on firm gas transportation capacity, which must be closely matched to a customer’s peak hourly energy demand (without renewables operating) or risk gas, and thus power, not being available when it is needed. 

This means that when renewables are operating, customers are still paying for gas transportation – and possibly also for the gas itself – even though it is not being consumed. This can become a significant cost barrier to introducing renewables into the energy mix, negatively impacting the project economics.

In contrast, diesel is a more flexible fuel that can be stored in large quantities and drawn on as required, without the firm commitments required by a gas pipeline operator. However, its emissions are at least 25 percent higher than gas when used for power generation. Diesel prices are also exposed to fluctuations in global oil prices and exchange rates, making it more challenging to demonstrate the commercial benefits of renewable electricity.

Distributed LNG provides the best of both worlds where large amounts of energy can be stored on-site and drawn on as required to provide a counterbalance to intermittent renewable electricity generation. LNG’s emission profile is much lower than that of diesel in electricity generation and its pricing is more stable enabling the benefits of introducing renewables to be demonstrated more effectively.