by Bob Shively, Enerdynamics President and Lead Facilitator
“Building networks to accommodate peak demand — or lulls in supply — requires overbuilding of infrastructure that leads to extra costs and system inefficiencies.” ~ Sam Wilkinson, IHS 
A key to efficient design of gas networks is the interplay between pipeline capacity that can deliver supply into a region and storage that can supplement supply when flowing pipeline gas is insufficient to meet demand.
As costs for certain electric storage technologies decline, designers and operators of electric systems are beginning to envision a future where electricity storage will be used to significantly improve the efficiency of electric networks in a similar way. Let’s explore the principles behind use of storage to improve system efficiency and look at how storage is used in gas systems. Next week we will discuss how it may be increasingly used in electric systems.
As described by Sam Wilkinson in the IHS whitepaper Reaching Peak Performance, networks are commonly designed to ensure that supply can meet demand even during periods of unusually high demand and or lulls in supply (although this is not always true — failure to build for peak demand is why we end up sitting on the freeway during rush hour or can’t text on our phones during a popular sporting event). Of course, building for peak demand is expensive. The result is that consumers must pay for facilities that sit idle much of the time.
An example of this from the electric world: the California ISO has a typical annual peak load exceeding 46,000 MW while the typical average annual load is more like 22,000 MW. To ensure the peak can be met, the California system maintains about 55,000 MW of capacity plus transmission to import power from out of state. This means that almost half of the system is underutilized during numerous hours of the year. Indeed, looking at the load duration curve for California shows us that the last 15,000 MW of supply is needed for less than 10% of the hours of the year.
Hourly demand in the California ISO for typical summer week
California load duration curve
Similar disparities exist for gas supply and demand. A typical annual average gas demand in California for “normal” weather is around 6 Bcf/d. This rises to about 7 Bcf/d for a year that includes a cold winter (lots of heating load) and a low hydro year (lots of gas power plant demand). Yet the highest daily sendout recorded in recent years was 8 Bcf/d in the summer and 11 Bcf/d in the winter.
How Gas Operators Use Storage to Meet Peak Demand
Absent storage, the gas companies in California would need to build over 11 Bcf/d of pipeline capacity into the state to ensure ability to meet the peak. And a similar effort would be required to match capacity and peak demand for each local transmission line and each distribution feeder serving a neighborhood. But luckily natural gas can be stored — in the pipeline itself, in underground reservoirs, and in above-ground tanks. This gives operators the flexibility to pack extra gas into pipelines prior to expected cold days and to draw from underground storage when flowing supplies are insufficient to meet demand.
California also uses utility regulations that require large industrial and power plant customers to accept curtailment of supply on peak demand days unless the customer wants to pay extra for firm service. Thus, on peak days, there can be a demand response as utilities notify large customers they must curtail gas use. This means that portions of the gas system do not have to be sized to cover these customers on extreme days.
The result of mixing and matching pipeline supply capacity, underground storage capacity, storage in the pipe, and demand response is that California has reliably run its gas system with the approximately 8 Bcf/d of pipeline capacity and 4.5 Bcf/d of storage capacity. This is significantly more efficient than building enough pipeline capacity to cover peak needs.
Historically, the electric industry has built supply capacity to cover peak needs, plus an additional 15% reserve margin for ensuring reliability. In next week’s blog, we’ll explore how storage and demand response may change the paradigm for electricity, allowing the industry to attain some of the system efficiencies gas has achieved.
Want to learn more about how gas systems work? Look into Enerdynamics’ Gas Systems Fundamentals live seminar.
 From Reaching peak performance: What the electric power sector can learn from society’s other vital networks, Sam Wilkinson, available at https://cdn2.hubspot.net/hubfs/2810531/Collateral/AES%20ES%20White%20Paper%20-%20IHS-Markit%20The%20New%20Energy%20Network.pdf