Public Utilities Reports

PUR Guide 2012 Fully Updated Version

Available NOW!
PUR Guide

This comprehensive self-study certification course is designed to teach the novice or pro everything they need to understand and succeed in every phase of the public utilities business.

Order Now

Fossil Fuels and Energy Policy: Understanding the New Natural Gas Economy

How gas supply and price disruptions now outweigh oil imports as the nation's real energy problem.
Fortnightly Magazine - November 15 2000

to $6 per million Btu-would not invalidate this conclusion, the assumption of gas availability in such substantial quantities for limited periods of time in the summer might not be realistic.

For example, a typical 150-MW, simple-cycle combustion turbine plant with a heatrate of 10,000 Btu per kilowatt-hour would require 36,000 Mcf of gas per day. Even for a large pipeline with 1 Bcf per day throughput, this required gas supply would correspond to 3.6 percent of the total. Consider that there might be several such plants needing this much gas in a relatively small area, and it is apparent that counting on such large volumes of reliable supply for relatively short periods at reasonable costs could create large contracting problems. Therefore, while this "thought experiment" is illuminating, it may not offer a practical response to even endemic price fly-ups into the range of $250-plus per megawatt-hour lasting for only a few days per year.

Scenario II: Combined-Cycle Turbines for Base Load

A more reasonable approach would be to plan to use simple-cycle combustion turbine capacity for more extended periods of firm on-peak prices of $100 per megawatt-hour (10 cents per kilowatt-hour) or more-i.e., in excess of 1,000 hours per year. In fact, some of the most advanced (aeroderivative) combustion turbine systems have electric efficiencies as high as 42 percent (on a lower heating value basis), or a heatrate of 9,000 Btu per kilowatt-hour. Their installed cost will be higher than that of the less-efficient systems, but they are clearly suitable for more extended operation.

Overall, however, for intermediate and baseload service, combined-cycle modules in which about two-thirds of the power is generated by one or more combustion turbines and the remainder in a steam turbine are most attractive. The steam turbine is operated on the output of a heat-recovery boiler, which utilizes the 900¼-1,000¼F flue gas from the combustion turbine(s). The economics of a typical 250-MW module with an installed cost of $500 per kilowatt in a baseload mode (85 percent annual operating factor) are shown in Table 3. A levelized gas price of $4 per million Btu is again assumed. Of course, only a year ago we assumed gas prices in the $2.50 per million Btu range and profitable operation at 3 cents per kilowatt-hour ($30 per megawatt-hour) compared to about 4 cents today. The electric efficiency of such combined-cycle plants has now risen to 57 percent to 60 percent (heatrates of 6,700 and 6,300 Btu per kilowatt-hour, respectively), which makes these plants somewhat less sensitive to gas price escalations.

So far it appears that the combined-cycle option makes up at least half of the large orders for delivery of turbine systems. However, even if gas prices do not temporarily derail the boom in turbine system capacity additions, the basic supply problem creates some risk. Construction of 100 GW of combined-cycle capacity over the next 15 years for baseload operation would increase gas consumption by nearly 5 trillion cubic feet (Tcf) per year. As recently as 1999, the EIA had projected an increase of 160 MW between 1997 and 2015, although