Why are companies investing billions in natural gas-fired power in Ohio? Jackie Stewart (Opinion)


Guest columnist Jackie Stewart is state energy director for Energy In Depth-Ohio, a research, education and public outreach campaign focusing on on-shore energy resources, including natural gas. 

Within the past few years, there has been a flurry of natural gas-fired power plants sprouting up all over Ohio by non-utility companies, or Independent Power Producers. To date, there are 11 projects under construction, announced, approved or completed, with investors eyeing the potential for several more. Together, these 11 projects will add 11,217 megawatts of electricity, powering over 9.2 million homes and create an estimated 6,365 new construction jobs.

According to economic impact studies required by the Ohio Power Siting Board, each project is slated to generate an estimated $14 billion of economic value to Ohio, including millions in local taxes, particularly to local schools. Together, that represents over $150 billion of economic value for Ohio! Obviously, this surge of private investment and economic activity is great news, but it does beg the question — why are these gas-fired power plants sprinting to Ohio?

Well, it’s largely because Ohio has lost 10,003 megawatts of electricity produced from coal-fired plants over the past few years. This reality, coupled with the development of Marcellus and Utica shales, has created an environment where it is extremely attractive and cost competitive to build new natural gas-fired power plants. It’s also because Ohio is a deregulated state, meaning it competes for low-cost electricity generation with 13 other states, to provide electricity customers in Ohio the best prices made available through an open market system.

Ohio “deregulated” and became an open market system in 1999, allowing customer choice in electricity generation while saving consumers an estimated $3 billion per year, according to a recent Ohio State University report. Recently, there’s been a rumor that Ohio may change the free market system that has allowed such investments and make Ohio a regulated utility state again. However (to date), legislators in Columbus have not moved on such actions.

Today, through this free-market based system, Ohio has become very attractive for private investment of natural gas-fired power plants due to the fact that an environment has been created in the Appalachian region that has led to the lowest natural gas prices in the developed world, resulting from abundant, local, low-cost natural gas. A 2015 Drilling Productivity Report shows that from January 2012 to July 2015, natural gas production in the Marcellus and Utica shale regions accounted for 85 percent of the increase in natural gas production in the U.S.

How many more of these plants will be announced in the Buckeye State? Time will tell. With an open, free-market system where natural gas, coal and renewables are all competing for market share, and with the lowest natural gas priced in the developed world, it’s really not surprising that Independent Power Producers are calling the electricity generation market in Ohio “ground zero.”