 Good afternoon, everybody. This is Guillermo Salvatia, your host on Perspectives on Energy here at Think Tech Hawaii. And today we'll be talking about the role of natural gas and the energy transition. So again, I am the Director of International Services for HSI, the Health and Safety Institute, where we train grid operators on how to handle everything grid related. So today we'll talk a little bit more on the role of natural gas in this energy transition. And going to be referencing a few of the capacity assessment reports from NERC, the NERC, which is the North American Electric Liability Corporation. And very interesting information on there. And one thing I want to make sure upfront that we understand that according to them, we are relatively fine for summer of 2023 and the beginning of the end of the year towards the winter of 2023. So, so far when it comes to capacity, capacity assessment and everything that we're looking at, in this case, we should be having adequate, not just the megawatt supply, but also adequate amount of fuel when it comes to natural gas. Sure, most of you already know that the majority of the portfolios out there, they usually run, a lot of them have a lot of natural gas running resources, whether it's a dual fuel type of generating site, or it's a combined cycle to combine two combustion turbines and one or you have, for example, a simple cycle combustion turbine that are used for peaking. Either way, that gas supply, according to NERC, seems to be in good order coming up throughout this year. Especially now that we've got these like quite a lot of these problems with the heat and load forecasting and we've been setting heat records day after day after day across this country. So, definitely something that could impact, for example, our consumption of natural gas in a lot of these resources, right? And of course in the winter it becomes even more severe, because not only are you competing with additional resources, for those resources to be able to use heating in the houses and industrial and businesses, but also you have some challenges when it comes to transporting the fuel, right? It comes to natural gas and those pipelines. So, yeah, so looking at the NERC 2023 summer reliability assessment that came out back in May of 2023 and it just, everybody looks to be in adequately good shape. Some of them have a seasonal risk assessment summary, which is elevated. They have the potential for operating reserves in above normal condition and that's consistent with the fact that you have higher than normal temperatures. And again, you lose one or two generators. You are likely going to experience some kind of load shedding possibly, right? But for the most part, there's no, I haven't seen any high risk assessment areas in the US. Just great news, right? Last year, year before, we were seeing things were painting a different picture regarding that, right? So, just great news in this case, right? When it comes to electric supply, we should be able to meet our forecasted load for the rest of the year in spite of this heat that we're experiencing and even what we expect to see in this winter. The other nice aspect of this is that there was regulation put in place and to be able to better manage winter operations for some of these generators. Same things happening with some of the gas pipeline suppliers. So, again, a lot of safeguards and that's usually, I believe, was a storm URI and the other winter storm that we had that affected the haircut region, right? And then some other areas in the Midwest. So with that in mind, you saw quite a bit of changes given the water capabilities of some of these facilities, whether it's generation or the delivery of gas, right? So, the only challenge that they normally would see would have been the delivery of gas in this case, right? Whether you have a constraint on the pipeline, don't have enough supply, or you're not, you're running out of that supply at some point because either there was a damage that occurred to those pipelines, or there was a lot more usage than was expected. Of course, mind you, a lot of this fuel supply is arranged for in advance, so that is usually a forecast and usually a firm contract in place. They got non-firm contracts, just like you see, for example, in transmission space, but the same thing happens with these pipelines. But that, for this year, NERC feels pretty comfortable, pretty confident that we should be fine. The long-term forecast, with the next five years, not so much, you see a lot more of the elevated risk in a lot of different regions, namely, WEC, for example, has some areas that are in definite risk as well, and some areas in the northeast and some areas in the north, right? So that's over the next four or five years, and a lot of that has to do with the fact that they have a lot of what they call premature retirements of base load generation. That could be natural gas, nuclear, it can be even coal, right? So in these instances, right, you're going to see that base load generation, they're retiring it early, they're replacing it with renewables. The problem with that is that anyone of these base load units can usually have an 85% availability for somebody's renewables in some cases. They have wind, for example, some of them have 15%, 20% availability, depending on how consistent that wind blow is, that wind forecast is throughout the year. Other areas, for example, some solar have maybe 40% to 50%. So in this case, right, you can't count on that capacity for that particular peak, which is why you need to have some of that base load generation. So as we have more and more of these premature retirements for these coal generators, which we have climate goals to meet and meet certain emission needs requirements, this problem now is exacerbated by the fact that the majority of these sites are either repowered to be able to burn natural gas, or they will go ahead and install, for example, a combustion turbine or a peaker that runs on natural gas as well. So this in itself presents as an opportunity to be able to meet that load for this variability, but at the same time, right, you're dependent on that supply, and as more, we're going to see more and more of these types of facilities commissioned, you may begin to see a problem or when it comes to constraints with supply, or if not enough pipelines are being built and put into service, right. So that's the challenge at this time, given the fact that we're seeing different things and you have two different priorities that really are interrelated, and they also affect each other very, very dramatically. One of them is to have very important climate goals that we need to achieve, but of course we can't be the only ones in the world retiring coal plants while countries like China and other parts of the industrialized developing world are putting coal plants online at a rate that's faster than the ones that we shut down. So that's definitely a problem, right. Putting ourselves into a position of reduced reliability to meet these climate goals, while at the same time these other countries are not abiding by it but any of those and their main goals just make sure they have enough electricity to meet their needs without any concern off of the environment. So that becomes a challenge for us as well. So given those challenges, I mean of course that for us one of those ways to meet those is again the transitional fuel, right, becomes natural gas. It's amongst one of the cleanest of all the fossil fuels. I remember in my day back in the early 2000s where we were getting away from oil here in Florida and replaced everything with natural gas pretty much. And that made a huge difference when it came when it came to emissions. And we got from we were one of the biggest consumers of oil to actually not consuming any oil at all. So that utility in Florida so it was a pretty impressive feat to go ahead and do that but it required having having a fleet that was mostly run on natural gas so then the soft presents a problem right. So, and that's the whole thing right, making this transition from very dirty fossil fuels to to emission free energy resources or renewable resources will require for example something to transition over until we see for example SMR or more hydro or more waste facilities that are clean but dispatchable, you're going to need something to be able to help you in this transition. Batteries were great to have those but you know three four or five hours and then at the cost for for installed for some megawatt they're just not right now right and the fact that you may have four or five days six days of weather where you're unable to charge or you're having a friend where your batteries won't be able to give you that supplemental backup right as you as you could get from a base load unit that's dispatchable So SMR is they're saying the earliest is 2029 and I got an SMR is a small budget or reactor, but so until then right we're going to have to rely on some of these combustion turbines or some of these combined cycle plants that are running natural gas and which you know is is at least something we have plenty of and we have the infrastructure in place to be able to transport that fuel from one from the source to to the delivery point challenge there of course is availability and even for example cybersecurity cyberattack or even infrastructure breakdowns right. So, keeping that in mind right from my perspective, how do we train operators to be able to manage for example a grid where your generation has to mitigate changes, whether you're running your dispatching a balancing authority your either renewables, you're running combined cycle plants are run gas, you're, you're, or you're, you're running base load generation. And in some places now you're even dispatching nuclear plants, they ahead, which I thought I never thought I would, you know, see this in my career but yet here we are with dispatching nuclear plants because they ahead, which is, you know, that's in response to load forecast and this renewable viability, which you know, I'm glad to see we the industry pivot was able to pivot and adapt, but again this has its own costs, and its own maintenance maintenance nightmares you can that changes the actual price dynamic for every megawatt produced by those generating facilities. And then of course if you're displacing nuclear to accommodate renewables, and that also changes the overall price of your system and that lambda price is different based on that. So as an operator right, what we do to train in this case right well, one of the things that I think is a permanent drill is a very, very important drill to be able to run of course is to simulate a loss of field scenario, whether you have your pipelines for example a compromise outside for attack, or there's something happened the weather wise which we've already seen happen and some of our regions right. One of the things to actually accomplish there is actually have the operators train have the plants individually trained on doing a fuel swap. In a lot of cases, most of these facilities, most not all tend to have liquid fuel storage on site, which allows them to run maybe several hours. I mean, most of the ones that I've seen had the capacity to be able to run maybe three or four days have followed. So that was rather an interesting, I guess, assets would be able to manage in that case because any you're given that ability challenges when swapping fuels. Usually you don't get much of a, much of a warning you may have maybe a couple of hours of warning. If you see it coming sometimes you don't you may have maybe a half hour warning based on the fact that you know you're either losing supply you you've had a problem with the pipeline. So, in this case, right, the system operator, the grid operator, for example needs to be well trained on how to manage those changes. And that's something that in my, in my previous job, we were able to actually do that as as one of our one of our simulation drills which I should get the operators. I'm familiar with the process of a system where I fuel swap depending on where you had a failure in the pipeline, or if you had lost all your supply. So that was a very interesting challenge. In fact, we already had a scenario at one point where real time, we couldn't run everything a natural gas you have to either pick one or the other, and you have to actually change some of the fuel mix that will go into that facility. So they were pretty much getting a lot of that real time in that in that in that particular system, but ultimately they had, and I'm sorry about the background noise, we've got a thunderstorm here tonight. So anyway, so that is Florida after all. So anyway, so then we were practicing on the challenges right when it comes to doing a fuel swap. And again, it's mostly facilities are able to do their fuel swap on site, they can usually they have rehearsed it enough real time that they can actually do it and it seems pretty seamless. And they will go from gas to liquid fuel, and they will just simply take it off automatic generation control, they will hold it at a steady load maybe back down. But in most cases, they would just keep it at the same load level and just swap fuel. And then you're just running again. Mind you, you would see a, you will see a definite change in the price because liquid fuels are liberal. It's quite a bit more expensive than natural gas. And right about now we're looking at 3.3 and a half between $3 and $4 per MMBT use is the price right now as as we're going through the summer so not not that expensive I used to see it somewhere in the teens at some point so quite a big difference. But right so in that particular process right simulating that in the system, that becomes really important right to get operators ready to be able to respond whenever there is a fuel crisis. So, that's one thing to expect right so so so at model review here so as a as a transition fuel right when it comes to going from these fossil fuels and majority fossil fuels or actually replacing some of these coal fired plants replacing oil burning plants or replacing aging infrastructure right specifically these older combines like plants. You're still going to need natural gas to be able to get you to the point where either SMR are available or we commissioned more facilities. Or we have a different resource that that becomes available or or like batteries are a lot a lot more widely distributed or you may even see for example the advent of distributed energy resources that actually on their own become quite the resource that are that most utilities can go ahead and dispatch, but the likelihood of that happening in the next four or five years not very high, most likely you're going to need for example having quite the mix right you're going to have renewables you can have an increasing number of renewables. But at some point right you're dealing with inverter based resources, and all the interesting behaviors that they that they exhibit whenever you have a fault on on the system, especially somewhere near those resources. So you will need to have for example base load and a lot of that base load for for now it's going to be in the form of combined cycle plants that are running natural gas and then peaking units that are going to be a simple cycle combustion turbines that are also running a natural gas. And with the liquid fuel backup right and seems to be the most reliable feature at this time the least definitely definitely the lowest carbon footprint compared to oil or definitely coal. And you, but you know you still might see quite a bit of technology using carbon capture in a lot of these places where they just can't retire these plants given the reliability requirements on that area and that that grit to polish. So, again, that's, that's the supply the supply challenge the other one of course is getting natural gas to the sites. Now, you know, I would love nothing more to see quite a mixed portfolio of generation resources whether you have some more nuclear, some new hydro, some other types of resources in not just renewables right but then also the green hydrogen blue hydrogen. And also will be a great addition to the fleet. Problem is with that right now is we can put a we can put like like an accurate price on it with these utilities can actually make a long term forecast and go ahead and make the capital investment on this technology that isn't even proven yet right. So, definitely it's as as an industry we're very like source agnostic we, we don't care where you get your, your energy from as long as it's reliable cost effective and then of course you know it's a safe and then, and then that will also meet these these zero carbon emission goals right. So, and the final thing I wanted to like remind everyone of course is is as we go into this transition where we retire more of these like base load units where it's coal or nuclear. We might see a whole lot more of these facilities either being repowered or replaced probably in the same location with combined cycle plants, whether it's a site repowering whether they're replacing all these borders and all these different industrial generation coal and oiled with the brand new combined cycle site for a larger generator or you might see a lot more of these CT's popping up everywhere, especially where there's a conveniently located site where they have natural gas. So that is what you're looking at and of course you know train train train train your operators on how to, how to dispatch the fleet, and the more importantly how to dispatch it and in light of a fewer shortage so they need to do a swap. And then of course that doesn't work. And you do have a problem where you're losing generation because you've lost fuel and the swap was and was not successful. And of course that would require taking other emergency measures up to and including the shedding of load, which usually comes by in the form of feeder rotation right. So, that's the different things that we're looking at. And but then again the role natural gas of course will be a present one and we got quite a large supply of that in this country and in Canada so I guess with that we're in the shape and in fact we can probably remain being a net exporter of that resource for for the foreseeable future. So anyway, so okay so that is all I have for tonight. I thank you so much for watching. Have any comments please go ahead and like subscribe or and then leave comments on below and I tried my best to respond. And then then again thank you again for viewing think like Hawaii perspective and energy. Thank you and have a wonderful afternoon. Thank you so much for watching.