Atmos says natural gas fuel cell offsets more carbon than solar, wind in less space

A newly installed natural gas-powered fuel cell in Atmos Energy Corp’s enterprise data center. generates low-emission, grid-independent electricity, and the Dallas-based utility is increasingly finding ways to reduce emissions as its multi-state customer base grows.

“Natural gas is once again proving that it plays a pivotal role in reducing greenhouse gas emissions while increasing the reliability of our critical facilities,” said Jennifer Ries Vice President, Pipeline Safety.

The 460 kW fuel cell generates electricity and heat through an electrochemical process that uses no combustion or moving parts, according to Atmos. The technology offers up to 90% system efficiency and, when paired with renewable natural gas (RNG) or carbon offsets, is zero emissions, he noted.

Atmos, which in November said it ships 8 billion cubic feet per year of RNG, said it would work to power the fuel cell with RNG. Atmos serves 3.4 million natural gas customers in eight states.

“A fuel cell also uses far less land than other renewable energy projects, generating nearly 500 times more energy per square foot per year than solar or wind,” the company said.

More RNG projects?

During a conference call to discuss second quarter fiscal 2022 (fiscal 2022) results, CEO Kevin Akers said the company is “evaluating nearly 30 opportunities” to expand RNG transport through its system. Investments in RNG, at least for now, would be made downstream of the sales meter.

“We really receive the process gas and transport it on behalf of our customers,” he said. “And right now, those assessments are really what’s close to the system, what’s close to the system. So any capital investment at this time would be modest, and it might be to expand a short distance to a facility. But really, we’re not investing upstream at this point.

RNG investments are part of broader company-wide plans to reduce methane emissions to 50% of 2017 levels by 2035.

Meanwhile, Akers said the company is also upgrading its natural gas distribution, transmission and storage systems to support the reduction in methane emissions. Atmos is “on track to replace 800 to 1,000 miles of pipes and 20,000 to 30,000 steel service lines…”

Akers also called the modernization program the centerpiece of the “comprehensive environmental strategy that focuses on reducing our Scope 1, 2 and 3 emissions and the environmental impact of operations in five key areas of operation: fleet, facilities, gas supply and customers”.

Customer Growth

Atmos is modernizing its infrastructure while expanding its customer base. Chief Financial Officer Chris Forsythe said customer growth in the first six months of fiscal 2022 “has been stronger than expected, and we expect this trend to continue in the second half…”

By the end of March, Atmos had added more than 57,000 customers a year, an increase of 1.8%, Akers said.

“We added nearly 1,800 commercial customers in the first 6 months of this fiscal year and we added 15 new industrial customers that we expect will use nearly 5 billion cubic feet of natural gas per year at full capacity,” did he declare. “On a volumetric basis, this 5 billion cubic feet of annual industrial customer usage is equivalent to adding nearly 85,000 residential customers to our system.”

He cited “very good support from a regulatory standpoint, from a policy standpoint, from a community standpoint” for natural gas in his service territory as the reason for the increase in customer base.

Akers said “the conversation the general public sees and wants to feel about energy security” is likely a factor, noting that geopolitical factors such as the war in Ukraine have propelled energy to the fore.

“Natural gas in our industry has always been there behind the scenes…we’ve always been kind of out of sight, out of our minds,” he said. Energy consumers “want to know that natural gas is going to be there, it’s a viable choice…it’s plentiful and they’re telling us about national energy security and how they can have it in their community.

Atmos reported $505.8 million in capital expenditures in 2Q2022, up year-over-year from $388.9 million.

Net earnings for 2Q2022 totaled $325 million ($2.37/share), compared to earnings of $297 million a year ago ($2.30)

For the fiscal year 2022 guidance, Atmos estimated capital spending at $2.4-2.5 billion versus $1.97 billion for fiscal year 2021.