Dive Brief:

• Higher gas prices and a push to utilize more clean energy sources have significantly reduced gas demand in California this summer, according to a report in Argus Media.
• According to data from Ventyx, gas flow in southern California at the SoCal Citygates trading hub was down 7% in July, compared with the same month last year. In the northern portion of the state, PG&E Citygates saw a July decline of 10% (June's decline was 16%) relative to the previous year.
• Southern California Edison President Ron Nichols has spoken with Utility Dive about the change in resources, and says the utility's push for more battery resources has helped depress the need for gas.  

Dive Insight:

As the price of natural has risen above last year's lows, coal has made a comeback. According to the U.S. Energy Information Administration, coal-fired generation will exceed gas this year and next.

But that trend is nationwide, and while gas demand is down in California, it isn't because of coal-fired power plants. The state has expanded its use of battery storage to help integrate more renewables, and the results are showing in pipeline flows.

SoCal Citygates averaged 2.3 Bcf/day during the past two months, a decline of 5% to 7% compared with the same months last year. And PG&E Citygate flows averaged 1.5 Bcf/d in June — a decline of 16% from June 2016, according to Ventyx data.

SCE Chief Nichols says the utility now looks for ways to avoid gas turbines at every resource decision point.

“We will constantly be looking at, every time we need a new resource — how can we avoid the need to add another gas-powered resource?” Nichols told Utility Dive. “Even if they are built, they're not gonna run much. They're going to be there exclusively for reliability, full stop. That would be the only reason they're added.”

A leak at Southern California Gas's Aliso Canyon storage facility has also pushed the state to embrace battery storage. With less gas available due to the leak, the U.S. Energy Information Administration estimated gas generation in California was off about 20% during June, July and August of last year but was replaced largely by carbon-free sources and power imports. The state rushed out battery storage projects to avoid energy shortages.

Nationwide, coal's share of generation is expected to rise from 30% last year to almost 32% this year, while gas-fired generation makes up 31%. And those projected generation shares are expected to remain about the same in 2018.

In 2016, natural gas produced more than a third of the nation's power.