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A recent report from the Congressional Research Service looks at some of the issues involved in displacing coal-fired generation with natural gas-fired generation as a way to reduce carbon emissions.
The report follows a hearing last October by the Senate Energy and Natural Resources Committee. At that time, Dennis McConaghy, executive vice president with TransCanada Pipelines, told Senators that natural gas can provide “meaningful, immediate and verifiable” carbon dioxide emission reductions.
At the same hearing, Jack Fusco, president and CEO of Calpine Corp., said in written testimony that the increased use of existing natural gas-fired power plants could “meaningfully reduce the CO2 emissions of the power sector, immediately and for the foreseeable future.”
William Hederman, senior vice president of Concept Capital’s Washington Research Group and former Director of FERC, said in an email that the follow-up Congressional Research Service (CRS) report “illustrates the massive potential for natural gas to offer a relatively low cost path to significant and relatively rapid CO2 emission reductions.” He called the report a “positive development” for natural gas producers and pipelines.
The CRS report pointed out that a consequence of the combined cycle building boom and bust is that the fleet of natural gas combined cycle plants has a large amount of unused generating capacity. The report said that around 13 percent of combined cycle capacity operated as baseload in 2007. (It defined baseload as operating at an annual capacity factor of 70 percent or greater.) That amounts to around 22,151 net summer megawatts and 42 generating units.
By contrast, more than one-third of 2007 combined cycle capacity had a capacity factor below 30 percent. That equaled almost 58,000 net summer megawatts and 114 generating units.
As a group, combined cycle plants posted an average 2007 capacity factor of 42 percent. That included 314 plants with almost 171,000 MW of net summer capacity.
Coal plants, on average, had a 75 percent capacity factor in 2007. The CRS report said the apparent mismatch between combined cycle and coal plant operating patterns creates the interest and perceived opportunity for displacing coal power with gas generation from existing plants.
The report suggested that if combined cycle capacity could be doubled to 85 percent the power output would equal around 32 percent of all coal-fired generation in 2007. The result would be to displace 19 percent of CO2 emissions associated with coal-fired generation.
The report highlighted a number of problems with this scenario, including transmission, system dispatch and issues related to natural gas supply, price, transportation and storage.
To illustrate one transmission problem, the report consider a hypothetical 1,000 MW of surplus combined cycle capacity in the northern part of the Electric Reliability Council of Texas. Although available, that capacity may be unable to displace an Oklahoma-based coal-fired power plant due to transmission issues. “Although the regions are adjacent, from the standpoint of the power grid they are electrically isolated from each other,” the report said.
The report also looked at natural gas and coal-fired power plants that are close enough to one another physically to offer a reasonable substitute. Analysis here showed that displaceable coal generation and related emissions amount to “only a fraction” of total
The report said large-scale displacement of coal-fired generation could result in a “significant” increase in
That could be problematic, however. A 2009 assessment by the Federal Energy Regulatory Commission called the long-term gas production story “one of abundance.” It said that natural gas production is becoming more like mining and manufacturing with “high probability of production from each well drilled.” This environment “should have profound effects on the traditional boom and bust cycle of gas production,” FERC said.
That optimism was tempered by testimony before the Senate panel last fall by Edward Stones, director of risk management for Dow Chemical. He said that in 1998, 2002-2003 and in 2005 new production came online from
The CRS report said a rapid change from coal to gas could involve a significant acceleration of gas demand growth compared with current estimates from the Energy Information Administration.
The report left the door open for Congress to study the potential for displacing coal with power from existing gas-fired power plants. At the same time it didn’t address the potential cost such a conversion might represent. If a price of carbon is set, as many in the industry are advocating, early conversions may be rapid and driven by market considerations rather than congressional action.
February 17th, 2010 at 12:36 PM
I’ve read elsewhere that it’s feasible to replace coal with natural gas in coal-fired plants — that modifying such a plant is not very expensive or difficult. Would that not render moot all the issues about where existing natural gas plants and excess capacity?
February 17th, 2010 at 4:11 PM
While the statements about natural gas-fired generation creating less CO2 emissions than coal and that natural gas-fired generation could yield an immediate reduction in CO2 are true, we must understand a few things behind these statements.
First, natural gas-fired CO2 emissions are about 50% of the current generation of circulating fluidized bed coal-fired plants. This may not be true in the future as more coal plants utilize gasification processes.
Second, there is a reason natural gas-fired generation has low utilization today. While it is cheap to build, it is very expensive to operate. Natural gas-fired generation is a the top of the production cost model even with currently reasonable natural gas prices. There are several factors that will cause the cost of natural gas as fuel to go up. (1) If we use more natural gas-fired generation, that demand will drive natural gas prices up. We know this from experience. (2) As we bring more domestic shale gas into the fuel inventory, prices will go up because that extraction method is more expensive than what we have today. (3) As Europe, the Middle East, and other developing regions use more natural-gas fired generation, the cost of importing natural gas will increase. These cost drivers are just as fast-acting as starting up the natural gas-fired plants to replace coal-fired generation.
Third, if you increase the use of natural-gas fired generation in the US, then heating costs for businesses and residences will increase, and worst time being winter. In addition, we would see the return of 60%-70% annual price volatility in natural gas, which makes it very difficult for John Q Public to manage the costs at home.
Fourth, moving in a direction of using natural gas-fired generation to reduce CO2 emissions would give us a false sense of accomplishment. If you replaced all the coal generation, the US power generation CO2 emissions contribution drops from about 8% to 4%. Many people and groups would claim success with the resultant poliitics taking the heat off of truly solving emissions problems.
Fifth, if you take this study, some simple economic analysis, and some NETL studies about costs for next generation plants and carbon management, the result is a wash in relation to the delivered energy cost of using a \"clean coal\" fleet with carbon management and a natural gas-fired centric fleet with its sure to be higher costs of natural gas.
It is a shame that we have a trillion dollar natural gas-fired generation fleet operating at 10% - 30% capacity, but the cost of the fuel may preclude it from being a 75% capacity fleet today, and certainly tomorrow. I am not convinced that such a plan, or the Pickens Plan, gives us the best long-term strategy or even a bridging strategy.
This would require a more complete systems analysis to truly see if the nation would benefit from such a strategy, or if it would be just another quick and half-dirty dead end.
Steven Pullins
February 17th, 2010 at 4:15 PM
Mr. Buffett purchased enough right of way to provided almost all the gas needs of the country’s Midwestern and Western utilities.Besides the major production center of coal,the Powder River Basin has enormous reserves of newly processed gasification of shale.His railroad which has miles of coal cars which can be converted into pipelines.If Congress wishes they can underwrite the boiler conversions with tax incentives.
The Texas,Indiana,Pennsylvania gas can easily provide enough supply for the Northeast.
Bechtel and GE can create a enough conversion boiler contracts to keep our economy stimulated for the next five or ten years.