City releases PGW Diversification study to start path towards decarbonization

Study explores four ways to decarbonize by 2050

Philadelphia has a goal to achieve carbon neutrality by 2050. But one big hurdle remains: natural gas.

The City is the owner of Philadelphia Gas Works (PGW), the largest municipally-owned gas utility in the country, with over 1,600 employees and 500,000 customers. Over 70% of Philadelphia households rely on natural gas as their primary source of heating.

So how can the City reduce emissions from natural gas and decarbonize without impacting PGW’s business model, thus cutting jobs (and its own revenue)? It seems like a dilemma. But, it’s important to evaluate new business models that can also provide PGW with new sources of revenue.

Step one is to explore these questions and potential pathways for the future. The Office of Sustainability, along with Philadelphia Gas Works (PGW), released the Philadelphia Gas Works Business Diversification Study today.

A few of the pilot strategies and alternative PGW business models include:

• Decarbonized gas: An umbrella term, “decarbonized gas” includes several zero or low-GHG substitutes like biomethane, Synthetic Natural gas or others that are assumed to have a net netural impact on climate IF leakage is prevented. This would have limited customer disruption but are generally more expensive.
• Electrification: Switching natural gas appliances and sources to electric heat pumps, induction stoves, and more ways to divert from natural gas. Electrification improves air quality (reducing deaths from cardiovascular and respiratory illness) but may be more expensive than gas.
• Hybrid Electrification: Consumers can pair an air-source heat pump with a gas furnace as a backup during lower temperatures. Annual gas demand would drop and avoid extensive building upgrades but may impact cost allocation and lower gas utility profits.
• Networked geothermal systems: A large-scale adoption of networked geothermal direct heating would likely have ground source heat pumps that connect several homes to a central infrastructur

The City & PGW are actively investing in a few pilot programs from the study, including:

• A weatherization program with novel financing opportunities, where PGW and the City will work together to identify funding opportunities for a program to support low- and moderate-income customers in the upfront financing and implementation of weatherization applications, such as home insulation, and will review the regulatory structure needed to enable it.
• A feasibility study for networked geothermal systems, where PGW and the City will work together to identify funding for a feasibility study that investigates the technical and geological potential of block-level networked geothermal district systems, the necessary workforce skillset, and the utility financial and regulatory model for such a system.
• A local decarbonized gas program, where PGW convenes a working group with the Philadelphia Water Department and Streets Department to explore opportunities to convert City waste into biomethane, using local resources to reduce carbon emissions.

According to Christine Knapp, it may seem challenging to tackle. But just like climate change, there are exciting opportunities to explore with positive outcomes.

“There’s a tremendous opportunity with owning an energy utility at a time when an energy transition and diversification are progressing in the coming decades. It could put the city at the forefront of leading in climate goals, but also do the right thing for workers and economic wellbeing of the city,” said Knapp.

The PGW Diversification Study is a part of the city’s ambitions to lead on climate action and is supported by the Bloomberg Philanthropies American Cities Climate Challenge.

Photo by KWON JUNHO on Unsplash

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