Global Project Finance > Tax Equity Telegraph > New England’s Cold Snap Makes the Case for Renewable Energy
17 Feb '13

Colder than average temperatures and a severe snowstorm caused an increase in demand for natural gas for home heating purposes in New England.  However, home heating is not the only need for natural gas in the region; after the closure of many of the region’s coal and oil-fired power plants, natural gas now fuels much of the region’s energy production.  The spike in demand for natural gas for heating caused the price of natural gas to increase, which caused the price of electricity to increase sharply.

The New York Times reported that a megawatt-hour of electricity typically costs $30 to $50 and an MMBtu of natural gas less than $4.  Recently, natural gas has been $12 per MMBtu and a megawatt-hour of electricity $103.

New England has relatively little electric generation from renewable energy.  If it did, renewables would have partially mitigated the spike in electricity prices.  Winter is an optimal season for generating electricity from wind.  Further, sunshine during daylight hours most days in the winter is available for solar power.  If New England had meaningful electric production from renewables, the cold snap’s effect on the cost of natural gas would have had a smaller effect on the price of electricity.  This spike in electricity prices demonstrates the need for an “all of the above” energy policy, rather than relying exclusively on natural gas.