The supply of electricity and natural gas (NG) to residential, commercial, and industrial customers relies on complex and interdependent networks. For example, much of the load following capacity of the electric generation portfolio comes from natural gas fired power plants . Combined heat and power (CHP) technologies further increase the efficiency of power generation, as well as the interaction between the electricity and NG grids. As this technology can be scaled down for generation at the hundred-kW capacity and located at the neighborhood level , it is feasible to envision a future scenario whereby a large number of distributed CHP plants (or even smaller generation units on the order of a few kW) are deployed in a region that would at present only be serviced by the conventional electric grid.
Under the assumption of natural gas prices remaining low in the long term , this scenario appears as a very attractive alternative for the planning of future residential or mixed-use communities. However, the effects of the complex interactions between the electricity and natural gas grids that arise in this situation should be carefully evaluated. In this case, natural gas would be used for both large-scale power generation to supply the main electric grid and for electric generation closer to the demand sites. On the other hand, (peak) electricity demand at the local level may be met using a conventional transmission network.
In this work, we focus specifically on this pressing issue, and address the question “Does tighter integration of the electric and NG grids result in increased efficiency and environmental performance of both networks?” We develop several case studies investigating the operation and load of both the electric and NG grids when (i) CHP plants are present to service entire communities, and (ii) when smaller NG generators are located ‘behind the meter’ but can service several houses. Data for the electricity and NG demand of each customer are based on real-time smart-meter measurements from residences involved in the Pecan Street Project . Our study also considers the impact of real-time pricing for electricity and/or NG. We formulate and solve the model for the operation of the ensemble of consumers, generators, and distribution networks as a large-scale linear program. We compare several different objectives (e.g., minimum cost to each consumer, maximum profit for the electric and NG utilities) and analyze the resulting optimal energy usage profiles in terms of the net system efficiency and environmental implications. Our results suggest that, besides offering consumers more options in terms of sourcing energy, broadening and distributing the generating portfolio leads to an increase in the efficiency of both the electric and NG grids.
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 J. Logan, A. Lopez, T. Mai, C. Davidson, M. Bazilian, D. Arent, Natural Gas Scenarios in the US Power Sector, Energy Economics, 40:183-195, 2013.
 Pecan Street Inc., http://www.pecanstreet.org/energy/