HOUSTON—About nine minutes into her presentation at the recent ADI Analytics Forum, Nisha Desai dropped the C-bomb.

“The unsubsidized cost of solar, the unsubsidized cost of wind and the cost of gas combined-cycle is very comparable,” she said.

And to emphasize her point about how quickly the term comparable will be relevant to a crowd that included many in the natural gas business, she added, “That’s today.”

Desai, managing director of Houston-based Aurora Clean Energy Partners and former vice president of NRG Energy, was citing a November 2017 report from Lazard. That analysis acknowledged that current storage challenges for wind and solar confine renewables to a position of one element among many in the power generation mix. But Lazard also noted that new technologies could at some point fundamentally change how global power grids operate.

While the shale revolution has given birth to a paradigm shift in the U.S. oil and gas industry from imports to exports, the utility industry is also experiencing major changes.

The volume of natural gas used in power generation has roughly doubled to 27 Bcf/d since 2000. However, U.S. electricity demand has been flat, meaning that gas has been taking market share from other sources, mostly coal. The demand issue is key.

“The electricity industry has a slightly different set of dynamics than what it was used to, where it would invest in infrastructure and essentially get paid off with a growing rate base over the next several years,” she said. “That’s not happening anymore and it’s a pretty key dynamic to understand.”

Growth may be flat but the industry must still replace aging coal, nuclear and gas plants when they retire. The question is the choice of fuel source and Desai said she sees a future shaped by competition between gas and renewables.

The sheer abundance of U.S. natural gas and its superior reliability to renewables that cannot deliver after sunset or when the wind doesn’t blow makes the utilities’ choice an easy one from the perspective of those in the fossil fuels industry. But that fails to take into account the concerns of the utility sector.

“My worry is, where am I going to get my gas on a peak day?” asked Mark Darnell, senior energy manager at Air Liquide. Darnell’s job is to ensure fuel supply for the company’s power generation facilities he tied his concern to the expansion of U.S. LNG exports and whether that will lead to tight domestic supplies.

But Darnell was also wondering about the effect of exports on prices.

“In the past, on a peak day, prices were really determined by the NYMEX forward curve and your storage economics,” he told forum attendees. “But today we have a whole new paradigm with the exports.”

For example, assuming that the sale price in Europe is $20 per million Btu (MMBtu) and the netback on the Gulf Coast is $15, what would keep prices in the U.S. from jumping from the $2.60/MMBtu range to $15/MMBtu? (The European Union import price in January was $7.56/MMBtu.)

“Back on peak day … when it was 19 degrees here in Houston, there was a shortfall of natural gas on the spot market,” Darnell said. “The price here in Houston was roughly equivalent to what they were in the netback prices at [Cheniere Inc.’s LNG export terminal at Sabine Pass, La.], about $7 to $8.”

Companies like Air Liquide are not the only ones concerned about where the fuel comes from and how much it will cost. Desai said one of the biggest changes in the power industry was the emergence of the engaged consumer. And she wasn’t referring to tree-huggers.

“Google just announced that they have reached their goal of 100% of the electricity they purchase worldwide from renewables,” Desai said. “That’s over 3 gigawatts worth of electricity. Not only have they signed a bunch of contracts but they’ve gone and they’ve influenced policy. They’ve gone and they’ve asked utilities to give them access to the wholesale markets so they can purchase their own wind and solar.”

And another power generation trend for fossil fuel folks to think about: early stages of a move away from a central utility structure to distributed power.

“It’s really about flexible resources, flexible generation,” Desai said. The problem is that combined-cycle gas plants are not built for flexibility—they are made to run. Where flexibility is needed, the advantage could shift to renewables if technology allows.

“That’s not saying that there isn’t room for gas,” she said. “There is room for gas but it’s competing heavily with renewables for the new increment.”

Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.