Natural Gas

Luis Sarmiento, Juan Rosellón, Sauleh Sidiqui, Max Brown, Avraam Charalampos, Anahi Molar, Baltazar Solano Rodriguez

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This article analyses the impact of variations in the price of natural gas on the power systems of Mexico and the United States. For this, we optimize both power systems under three different scenarios of natural gas prices and quantify the effect of each scenario on the structure of the power mix, system costs, natural gas markets, and the evolution of emissions across both nations. We develop an integrated modeling framework by soft linking five different techno-economic bottom-up models into three optimization steps. Our results show that in the short-term, high natural gas prices increase the use of carbon-intensive energy sources, while in the long-term, it favors the electricity generation with intermittent renewables. This temporal variation in the consequences of higher natural gas prices is reflected in short-term higher operational costs, lower capital costs, and higher emissions alongside opposite long to mid-term trends. Additionally, the effect of low natural gas prices exhibits mixed and worth discussing results.

  • Submission Status: Working paper.