Natural gas becoming fuel of choice for electrical generation

By Staff | December 05, 2017

A new whitepaper from Gas Power Engineering and Construction (GPEC) says that as nuclear power plants are retired and coal-fired plants are shut down in the U.S, they’re being replaced by gas and renewable designs.

According to the paper, low-cost natural gas from shale now represents about 34 percent of U.S. generating capacity and is rapidly becoming the prime fuel choice for new electric power generation.

“Low prices for natural gas and wide availability of the fuel have ushered a construction boom for natural gas fired power generation since 2012,” the report says. “The largest areas for growth in the U.S. are the northeast, Great Lakes, southwest and southeastern United States.”

Quoting Energy Information Administration (EIA) data, the GPEC paper says that in 2016, about 4.08 trillion kilowatt hours (kwh) of electricity were generated at U.S. utility-scale facilities. Approximately 65 percent came from fossil fuels, 20 percent from nuclear energy and 15 percent from renewable energy sources. An additional 19 billion kwh was from small-scale solar photovoltaic systems.

“The discovery of shale gas and fracking the gas out of the basins has altered the previous $8-12/MMBtu price of long-term natural gas fuel supply contracts on the U.S. down to the $3/MMBtu range making the fuel a cost-effective resource for power,” the paper says. “Natural gas is becoming a prime fuel choice for new power generation and now ahead of coal for highest percentage of U.S. capacity.”

The paper emphasizes that “construction projects in the energy industry are always highlighted by uncertainty with supply, demand and market conditions ever changing, and the natural gas power sector is no different.”

Among the key changes highlighted by GPEC affecting decisions and investment in the power market are: emerging trends in electrical generation, grid management and power demand; how power plants are designed, developed and constructed; and new legislation, taxes and environmental regulation.

“Gas power is considered more reliable over renewables,” said Dan Fahrer, director of major enterprise platforms at DTE Energy. “The industry needs reliable gas-based generation to support renewables which have outputs predicated by the weather.”

GPEC said it’s possible that the rush to build new gas-fired power plants could swell the supply with little or no increase in demand. But an aging infrastructure leading to coal and nuclear plants being shut down at a rapid pace could help balance supply and demand, the organization noted.

“Meanwhile, government initiatives are on the table to protect coal-fired and nuclear power plants that are struggling to compete with cheaper energy sources, but it remains to be seen if these initiatives pass,” the white paper says.