Thursday, February 07, 2008

Utilities Turning From Coal to Gas

That's according to the New York Times:

Stymied in their plans to build coal-burning power plants, American utilities are turning to natural gas to meet expected growth in demand, risking a new upward spiral in the price of that fuel.


the executives see plants fired by natural gas as the only kind that can be constructed quickly and can supply reliable power day and night.

But North American supplies of natural gas will be flat or declining in coming years, according to the Energy Information Administration. The United States already has high natural gas prices, a problem for homeowners and many industries, like chemical and fertilizer producers. Some experts fear a boom in gas demand for electricity generation will send prices even higher.


Now, with many coal plants being canceled and demand for electricity rising by 2 percent or so a year, the prospect is that utilities will be forced to build and use a new generation of gas-fired plants regardless of the operating cost — and consumers will bear the burden of higher electricity rates.

All the more reason consumers should want utilities to build more nuclear plants. The chart below shows the U.S. was achieving fuel diversity from the '50s to the '80s. Then in the 1990s up until now, gas has been the preferred choice of fuel.

Hopefully next decade we'll be seeing a lot more blue in the chart.


Anonymous said...

Do another graph showing avg electrical cost per kwhr superimposed on this one for same time frame.

Nick G said...

Utilities want peak capacity, for which gas is still pretty cost-effective.

OTOH, we don't need more peak capacity, we just need to install residential time-of-use meters to shave those peaks, and give utilities incentives to conserve instead of build.

Rod Adams said...

I presume that the graph is for the US only.

Of course, there are at least a few people who are happy with the prospects of increasing demand for gas. They are also happy about the increasing price that will be supported by the resulting balance between a tight supply and an increasing demand.

Some of those people will express their pleasure by talking about how the high prices will encourage conservation. They may even talk within their own groups about how the high prices will force people to adopt a simpler, less consumption based lifestyle.

There will be other people who brag to their stockholders about how their efforts to position gas as THE lower carbon, lower pollution fuel source have been successful in increasing the company stock price through the increased profitability allowed by the increased sale price of their primary commodity.

Most people will fail to recognize that the second group will probably use the first group for cover and may even throw a few donations their way.

David Bradish said...

Yes Rod the graph is for the US. I'll make sure to fix it for future uses.

bw said...

Instead of nameplate the view should be for kwh or quads of delivered power. Then the increase from operating efficiency and power uprates would show. Plus the one third or one quarter level of operating efficiency for solar and wind would be put into proper perspective.

Alex Brown said...

There are several factors pushing the building of natural gas plants these days, but the biggest one is simply that combined cycle natural gas plants are profitable and carry relatively low risk. The huge capital costs of coal and nuclear mean that there is a considerable risk that you could lose billions of dollars if something goes wrong. Also coal and nuclear are not that well liked these days and natural gas seems to avoid most of the environmentalists wrath, so its good for PR too.

Also, despite what most people think combined cycle natural gas plants actually have relatively low production costs, at 7000 BTU/kwh we are looking at 50$/MWH with current prices, thats not good, but since alot of places charge 100$+/MWH to customers you aren't really losing money there (not making it either though since the 50$ is only the fuel costs not everything else).