Integrating upstream natural gas and electricity planning in times of energy transition

Abstract

Natural gas is projected to play an important role in the electricity sector despite the growing adoption of renewable energy technologies. For developing countries endowed with natural gas resources, integrating electricity and upstream natural gas plans allows them to benefit from the existing synergies between the two sectors in times of energy transition. To assess these synergies, we introduce an integrated upstream natural gas and electricity generation expansion model that considers the upstream sector as a source of revenue to the state. We formulate the model as a non-linear program, then we adopt a grid search technique to solve it. We apply it to the case of Lebanon and we show that for the announced 2030 renewable energy targets, the upstream natural gas sector quasi-always adds value to the state with limited additional emissions. This highlights that the upstream natural gas and the renewable energy sectors could complement each other to reach the desired climate pledges at the lowest costs. In contrast to non-integrated traditional generation expansion models that are highly sensitive to the price of the consumed natural gas, the proposed model shows that the state can maintain a near-optimal position for a wide range of upstream natural gas prices offering the needed flexibility when discussing gas purchase agreements with upstream companies.