Natural Gas Use Climbs in U.S. as Power Producers Switch Fuels
By Russell Ray, Chief Editor
Among the nation’s top 20 power-producing combined cycle plants in 2015, Tampa Electric’s Bayside Power Station was No. 9, generating 8,916 gigawatt-hours of electricity for the year. The plant was No. 17 on the same list in 2014. Photo courtesy: Tampa Electric
Editor’s Note: The Power Plant Operating Performance Report is published annually in Power Engineering magazine and on the website of Electric Light & Power. This report is based on data and analysis provided by Energy Ventures Analysis. The data is collected from Form EIA 923 “Power Plant Report” and EPA’s Continuous Emissions Monitoring System (CEMS). What follows is a summary and analysis of the information. Enjoy!
The use of natural gas to generate power in the U.S. continued to climb in 2015, matching coal’s contribution to power production at 33 percent of the generation pie for the year. But a close examination of the top-performing power plants in 2015 confirms a trend borne from stricter regulations for coal-fired power and a new era of long-term stability in the price of natural gas.
According to data collected by Arlington, Virginia-based Energy Ventures Analysis, total output from the nation’s coal-fired plants fell significantly in 2015 versus 2014, while the amount of power produced by gas-fired plants rose amid historically low prices for the cleaner-burning fuel.
“You had a lot of coal to natural gas switching in certain areas,” said Phillip Graeter, an analyst at Energy Ventures Analysis, which specializes in energy and the environment.
In 2015, the average capacity factor for coal-fired plants in the U.S. fell from nearly 60 percent in 2014 to 51 percent in 2015, as utilities dispatched less coal-fired power to take advantage of sharply lower gas prices, according to data from the Energy Information Administration (EIA).
The nation’s gas-fired combined cycle power plants produced 1.1 million GWh of power in 2015. That’s up 18.4 percent compared with 2014. Together, the nation’s top 20 gas-fired generators produced more than 194,000 GWh of power in 2015, up nearly 9 percent from more than 178,000 GWh in 2014.
Of the nation’s combined cycle gas-fired plants, Florida Power & Light’s West County Energy Center, a 3,844-MW plant near Palm Beach, produced the most electricity in 2015 at 20,428 GWh. Georgia Power’s Jack McDonough combined cycle plant was No. 2 at 17,849 GWh, followed by Duke Energy’s Hines Energy Complex at No. 3 with 12,223 GWh.
In addition to more power and slightly better heat rates, the nation’s combined cycle gas-fired plants ran longer and harder in 2015. According to data from the EIA, those plants ran, on average, at 52.3 percent capacity in 2015, up from 43.9 percent in 2014. The capacity factor for some combined cycle units exceeded 90 percent.
Tom Hewson, principal at Energy Ventures Analysis, pointed to significant advancements in gas turbine technologies, which have led to better heat rate efficiencies. In 2005, the average heat rate in the U.S. was 38.8 percent versus 46.4 percent today.
“As long as gas prices are low and gas is heavily utilized, you are going to see some incredible capacity factors,” Hewson said.
In addition, today’s heavy-duty gas turbines, in combined-cycle mode, are more than 60-percent fuel efficient, thanks to better materials capable of withstanding higher firing temperatures, improved blade design and advanced cooling technologies. In a few short years, industry officials say combined cycle fuel efficiency could reach 65 percent thanks to new manufacturing techniques and improvements in metallurgy.
Another significant factor behind higher capacity factors for gas-fired plants is the retirement of large amounts of coal-fired generation. Nearly 18,000 MW of generation capacity in the U.S. was retired in 2015, and more than 80 percent of that capacity was coal, according to EIA. About 30 percent of those coal retirements occurred in April 2015 after the Environmental Protection Agency’s (EPA) Mercury and Air Toxics Standards (MATS) rule went into effect. Much of that lost generation was replaced with gas, Graeter said.
Florida Power & Light’s Cape Canaveral Clean Energy Center, a 1,295-MW plant commissioned in 2013, and the Thomas C. Ferguson Power Plant, a 536-MW plant commissioned in 2014 near Austin, Texas, achieved the best heat rates among combined cycle plants in 2015, each recording a heat rate of 6.65 million British thermal units (MMBtu) per megawatt-hour (MWh).
The best heat rates among combined cycle plants in 2015 ranged between 6.6 and 6.9 MMBtu per MWh. That’s a significant improvement compared with heat rates a decade ago, when the best heat rates for combined cycle units hovered between 8 and 9 MMBtu per MWh.
“With more combined cycles being built that are very efficient, it will be unlikely that we’ll see any heat rate above 7 in our top 20 list for the foreseeable future,” Graeter said.
The $500 million Ferguson plant, which was constructed by Fluor Corp., uses about 35 percent less fuel per MWh than the plant it replaced. Zachry engineered and constructed the Cape Canaveral plant. Equipped with three H-class gas turbines from Siemens, Cape Canaveral has 50 percent more capacity and is 33 percent more fuel efficient than the old plant it replaced. Cape Canaveral was named 2013 Project of the Year by Power Engineering magazine.
“With higher dispatch, the units become more efficient and that drops the heat rates,” Graeter said. “We also had a significant build in combined cycles in 2015. Obviously, all of those new combined cycles are much more efficient. This led to a lower heat rate for the entire fleet.”
Big plants typically dominate the top 20 list. Twelve of the top 20 power-producing combined cycle plants are owned and operated by Southern Company and NextEra Energy. What’s more, many of the plants on the list were commissioned in the last two or three years and were built adjacent to the old coal-fired plants they replaced, Hewson said.
Meanwhile, the average capacity factor for the nation’s fleet of coal-fired plants fell from nearly 60 percent in 2014 to 51 percent in 2015. “This is because of low natural gas prices,” Graeter said.
Also, total generation from coal dropped significantly in 2015.
Output from all U.S. coal-fired plants dropped 14 percent to 1.34 million GWh in 2015 versus 1.57 million GWh in 2014. Production from Georgia Power’s Plant Scherer dropped from 18,478 GWh to 16,981 GWh. Despite the drop in production, Plant Scherer was still No. 2 in power production from coal-fired plants, behind Alabama Power’s James H. Miller Jr. Electric Generating Station, which produced 17,594 GWh of electricity in 2015.
Altogether, the top 20 coal-fired power-producing plants generated 279,144 GWh of electricity in 2015, down more than 8 percent compared with the top 20 generators in 2014.
In addition to coal-to-gas switching, another factor behind the decline in power production and capacity factors is the down time created by efforts to comply with the MATS rule, which became effective in April 2015. The down time required to make those upgrades contributed to the declines.
All of the coal-fired plants on the top 20 list have been retrofitted to comply with new standards for mercury, coal ash and wastewater, Hewson said. “We won’t see a lot of turnover on this list,” he said. “They are as safe as coal plants can be in this power market.”
The Paradise Power Plant in Kentucky, which was No. 18 in power production among coal-fired plants in 2015, will drop off the list in 2017 as the Tennessee Valley Authority moves forward with plans to replace Units 1 and 2 with a new gas-fired combined cycle plant. Instead of adding fabric filters and other equipment to comply with new emission standards, TVA found it would be cheaper to build a new combined cycle plant, Hewson said.
“They are putting in the gas pipelines as we speak,” he said.
But the outlook for coal-fired power may not be as bad as everyone thinks.
If President Barack Obama’s plan to cut greenhouse emissions from power plants survives the court, the EIA was projecting that another 55,000 MW of coal-fired capacity would be retired after 2016. But Donald Trump, a Republican, won the presidential election in November, which means Obama’s Clean Power Plan (CPP) will likely be scuttled and some of those plants will likely be preserved to provide low-cost, reliable power for consumers.
“If indeed the CPP goes away, a lot of the economics people were using to retire coal units changes quite a bit,” Hewson said. “Now, people might think a little bit different on carbon.”
Without the Clean Power Plan, he said, power producers may be encouraged to invest in the coal-fired plants they were expecting to retire.
There was little change in the top 20 producers of nuclear power.
The 3,970-MW Palo Verde Nuclear Generating Station in Arizona remained No. 1, producing 32,526 GWh of power in 2015. Generation from the entire fleet of U.S. nuclear plants totaled 797,178 GWh, essentially no change from 2014.
Total nuclear power capacity fell from 101,121 MW in 2014 to 99,837 MW in 2015. The decline stems from the December 2014 shutdown of Entergy’s 1,900-MW Vermont Yankee Nuclear Power Station.
The decommissioning of Vermont Yankee has been accelerated by decades under a deal to sell the plant to NorthStar Group, a New York-based remediation company.
The market for nuclear power began collapsing late in 2015 amid a sharp increase in renewable power and low-priced gas-fired generation.
“For a few months, a lot of those nuclear generators were not profitable,” Graeter said
The Fort Calhoun Nuclear Generating Station near Omaha, Nebraska was closed Oct. 24, after the Omaha Public Power District voted in June to retire the plant. It was the fifth nuclear plant retired in the last five years. Following the retirement of Fort Calhoun, the U.S. has 99 commercially operating reactors at 62 nuclear power plants nationwide.
Nuclear power accounts for 57 percent of the nation’s zero-carbon electricity, according to the EIA. Yet, the business of nuclear power is collapsing because the market cannot support the nation’s available capacity.
More than a dozen U.S. nuclear power plants have either closed, are in the process of closing or are at high risk of closing.
“We’re seeing power prices drop significantly,” Graeter said. “That’s really undercutting the expected energy revenue those nuclear units need (to cover fixed costs).”
New York is the first state to offer support to an industry struggling to stay afloat. Earlier this year, state regulators approved the Clean Energy Standard (CES). Other states, including Illinois, may follow suit with similar measures.
The CES encourages the use of nuclear and renewable power by mandating a 40-percent reduction in greenhouse gas emissions by 2030.
The plan also requires power providers to get half of their power supplies from clean and renewable resources by 2030. Most importantly, the rule would pay the state’s nuclear plants up to $965 million in zero-emission credits.
The New York Public Service Commission, which approved the CES, described it as a “public necessity” that would benefit the state’s grid, its customers and the environment.
Thanks to the new incentives, Entergy’s Fitzpatrick nuclear plant, which was scheduled for closure in 2017, was purchased by Exelon and will continue producing power for homes and businesses in upstate New York.
“This is really helping them become financially whole again,” Graeter said.