Decisionmakers in Virginia seem to be in a panic about energy reliability, driven by exploding demand in the Commonwealth. Rising demand is real — but doubling down on natural gas is not only the wrong response, it would be a very costly mistake. A singular focus on building new gas power plants in Virginia would saddle ratepayers with higher electric bills for years to come, and these plants would likely not get built in time to address near-term demand challenges.
The cost to build new natural gas plants has hit a 10-year high. Numerous elements are making natural gas generation a risky bet, none of which are expected to go away in the short-term. According to John Ketchum, CEO of NextEra Energy, a plant that used to cost $785/kW now costs around $2,400/kW — in other words, the cost to build new natural gas plants has tripled. Natural gas power plant components were already going up in cost, and international tariffs add to further uncertainties and risks of additional cost increases. In Virginia, these costs are passed directly on to consumers through the utility’s rate base.
Natural gas is an especially price-volatile industry: fuel prices over the past few decades exist in a violent zigzag of highs and lows. Natural gas fuel prices are on an upward trajectory (they are expected to double between 2024 and 2026). The industry is subject to geopolitical, seasonal, and extreme-weather-induced cost swings. Increasing LNG exports, which President Trump has signaled is a priority, tends to increase prices because it exposes domestic supply to global demand and geopolitical instability. Conflicts like the Russia-Ukraine war have driven prices to multi-decade highs, and future conflicts could do the same. Ratepayers will have to pay the volatile market price for fuel for decades to come if regulators approve new gas infrastructure now.
Seasonal price volatility also drives up the cost of fuel for natural gas power plants, leading to higher electric bills for Virginians. Winter pricing swings have been a part of the electricity market for years as the need to heat homes in cold weather increases demand, and summer volatility has grown as well as people crank up air conditioners in the heat. Seasonal challenges are made worse by extreme weather. Heatwaves or polar vortexes spike demand and may challenge supply. Natural disasters like hurricanes and wildfires can damage infrastructure and choke supply, also increasing costs.
Timing is another problem. A supply chain bottleneck, which increased gas turbine prices dramatically in the last year, also means that wait times for gas turbines currently stand at least six years in many cases. The accumulation of backed up orders means any power plant developer is going to join a long line before they can even access key components to build. Construction, labor shortages, rising interest rates, tariffs and interconnection challenges extend timelines further and costs up higher.
The good news is natural gas generation is neither the only nor the best option for meeting Virginia’s growing power needs. Renewable energy still proves to be the least cost and quickest power generation to deploy, even without federal subsidies. An energy portfolio based on wind, solar and storage would provide the same power and capacity needs for less than half the price of a new natural gas plant. With technology cost declines of 2.5 to 4 times over the past decade —and 9 times for battery storage — and zero fuel costs, wind and solar energy is affordable to build and operate.
The idea that Virginia’s energy future necessitates immediate investment in gas is fundamentally flawed. While the urgency to meet rising demand is acknowledged and appreciated, the solutions that are being proposed are neither timely nor economically prudent. The escalating costs associated with natural gas infrastructure, coupled with inherent price volatility and long construction timelines, render new natural gas generation investments impractical and financially burdensome for Virginians.
A wind, solar and storage energy portfolio can provide the reliability the grid needs in the time frame that’s needed to meet demand before 2030. By continuing to prioritize outdated and costly energy strategies, we risk locking Virginia into a future of escalating expenses. Some decision-makers’ myopic fixation on natural gas, with all cost and timeline trends pointing the wrong way lacks common sense. It is imperative that policymakers recognize the long-term benefits of renewable energy investments and steer Virginia toward an economically sound energy future.
Morgan Pinnell is managing director at Advanced Energy United, a business association devoted to advanced energy technologies.
