Can Pipeline Alternatives Avoid Costly Gas Utility Spending?
by Bob Shively, Enerdynamics President and Lead Facilitator
Introduction
As a natural gas industry veteran, I've witnessed firsthand how our sector faces unprecedented challenges. Rising infrastructure costs, ambitious decarbonization targets, and evolving regulatory landscapes are reshaping the way we plan. Gas utilities are finding the need to upgrade infrastructure to ensure reliable service, but they are also feeling pressure to maintain affordability. And in some states, gas utilities are tasked with moving to a decarbonized future. One strategy that addresses all three priorities is the use of non-pipeline alternatives (NPAs).
What Are Non-Pipeline Alternatives?
Non-pipeline alternatives represent a strategic shift in how utilities meet energy demand. Rather than automatically expanding pipeline capacity to address constraints, NPAs encompass a portfolio of solutions that can defer or eliminate the need for traditional gas infrastructure investments. These solutions include targeted energy efficiency programs, demand response initiatives, electrification measures, networked geothermal systems, and renewable gas integration.
The Business Case: Why NPAs Make Financial Sense
The financial appeal of NPAs is compelling. Traditional pipeline projects require significant capital expenditure, face lengthy permitting processes, and lock utilities into decades-long investment cycles. In contrast, NPAs can be implemented incrementally, allowing for more flexible capital deployment and reducing the risk of stranded assets.
Decarbonization Benefits: Meeting Climate Goals While Serving Customers
For utilities navigating ambitious climate targets, NPAs offer practical pathways to meaningful emissions reductions. By reducing overall gas consumption through efficiency measures or substituting renewable alternatives, utilities can make progress toward decarbonization goals while maintaining reliable service.
Regulatory Considerations: Getting Ahead of the Curve
Many state regulators nationwide are increasingly expecting utilities to evaluate non-pipeline alternatives before approving traditional infrastructure investments. States like New York, Massachusetts, and California have already implemented frameworks requiring NPA analysis in gas utility planning. By proactively incorporating NPAs, utilities can position themselves to thrive in the evolving regulatory landscape rather than scrambling to adapt later.
Real-World Example: Xcel Energy’s Mountain Energy Project
The Mountain Energy Project in Colorado demonstrates how NPAs can be deployed at scale. Launched in January 2025, this innovative approach serves mountain communities in Grand, Lake, Eagle, and Summit counties by combining energy efficiency, demand side management, and beneficial electrification programs with modular LNG and CNG equipment for backup during peak demand periods.
The project addresses multiple objectives simultaneously:
- Cost-effectiveness: At $155 million, it was the lowest-cost option among four portfolios evaluated
- Reliability: Ensures continued service during peak demand periods
- Decarbonization: Supports Colorado's clean energy goals and Xcel's vision of net-zero natural gas service by 2050
- Customer choice: Allows customers in targeted areas to reduce natural gas use through multiple programs
The Mountain Energy Project has garnered support from key stakeholders, with the Rocky Mountain Institute noting that it "shows the promise of deploying non-pipeline alternatives at scale, which will help customers reduce gas demand, save on bills, and cut emissions."
Implementation Strategies: Starting Your NPA Journey
If you're convinced that exploring NPAs makes sense for your utility, here are practical steps to begin:
- Identify network constraints in your system where traditional reinforcement would be costly
- Analyze the load profile in those areas to understand usage patterns
- Develop targeted NPA packages that address those specific constraints
- Create evaluation frameworks that fairly compare NPAs to traditional solutions
- Start with pilot programs to build organizational knowledge
NPAs Are an Important Tool
The utility industry has always evolved to meet changing conditions. By intelligently incorporating NPAs into the planning toolkit, gas utilities position themselves for long-term success while meeting the triple priorities of reliability, affordability, and sustainability.
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