| dc.description.abstract | This thesis intends to answer the following research question:
What role will natural gas serve in the transition to renewable energy sources in the German
and British power sectors, and what will be the implications for Norwegian natural gas
exports?
To answer the research question, two dynamic regression models are built to forecast
weekly natural-gas-generated power in Germany and the UK over the next two years. To
create scenarios, the predictors of the models, which are other important power generation
technologies, are given growth rates based on the German and British governments’ climate
action plans. Three scenarios are developed for both countries: (1) the Realistic scenario,
(2) the Rapid I scenario and (3) the Rapid II scenario. The scenario forecasts are produced
to provide insight into the future role of natural gas as a transition fuel and to observe how
the use of natural gas will differ in the German and British power sectors. Furthermore,
the point forecasts of the Realistic scenario for each country are monetized to quantify
the impact on Norwegian exports of natural gas.
Natural gas can be a transition fuel in two main ways: (1) as a substitution fuel for heavier
polluting energy sources and (2) as a stabilizing fuel for the intermittency of renewables.
The predictions of the German model are conditional on the pace of the clean energy
transition in Germany. For the Realistic scenario, the German model predicts a likely
increase in natural gas in the German power sector, while the model predicts a decrease in
the Rapid I and Rapid II scenario forecasts. Based on the Realistic scenario forecast and
the German climate action plan, this thesis finds that natural gas will partially support
renewables in replacing coal and that the use of natural gas in stabilizing intermittent
renewables will increase. Thus, natural gas will be used both as a substitution fuel and as
a stabilizing fuel in the German power sector in short term, which is expected to increase
Norwegian natural gas exports to Germany. In contrast, the British model predicts a
likely decrease in natural gas in the British power sector for all three scenarios. In the
UK, natural gas has been used to substitute heavier polluting fuels and is the next fuel
to be replaced in the power mix. Therefore, based on the Realistic scenario forecast and
the British climate action plan, this thesis finds that natural gas’s role as a substitution
fuel has passed, while it will continue its role as a stabilizing fuel when renewable energy
sources are intermittent. Thus, Norwegian natural gas exports to the UK are expected
to decline in the short term. In the longer run, natural gas is expected to decrease in
both the German and British power sectors and will eventually be phased out. Carbon
capture and storage and blue hydrogen production can extend natural gas’s relevance in
Norwegian export markets.
Keywords – Forecasting, Dynamic regression model, Natural gas, Transition fuel | en_US |
