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Renewable energy

Power Outlook: Natural Gas Key To Future Power Grid

Brendan Coffey
December 06, 2018
Installed capacity of gas-fired power plants will climb in the next two decades as the structure of the power industry continues to shift from one based primarily on central generation resources to a hybrid system comprising both centralized and distributed resources, according to a new analysis by GE Power. The company released the report — which incorporates the latest New Policies Scenario from the International Energy Agency’s recent World Energy Outlook — at Power-Gen International, an annual summit of energy-industry professionals held this week in Orlando, Florida.
That shift to a hybrid system, along with digital innovations and the need to address climate change, means electrical grids will become more efficient and cleaner by 2040, relying increasingly on natural gas. This energy transition will also require power infrastructure and markets to be more flexible in order to handle variations in the demand and supply of energy, a role natural gas power plants are increasingly able to handle.

“Gas-fired power plants are the only fossil fuel technology set to grow in almost all regions, thanks to the low up-front investment cost for new plants, the increasing availability of gas and the role of gas in [power] system flexibility,” said the International Energy Agency in GE’s analysis, “Gas-Fired Generation In A Transformed Energy Landscape.”

Along with solar and wind, natural gas will provide the majority of new global supply in the coming years. Over 1,500 gigawatts of new gas-fired generation capacity are expected to be added to global power networks by 2040. New gas demand will be driven by China, which will see its gas demand quadruple by 2040 under the IEA’s New Policies Scenario projection, which is based on the 2015 Paris climate agreement. China will combine with India and Southeast Asia to provide 60 percent of future energy investment. All told, IEA expects the world’s installed electric capacity to reach 12,480 GW by 2040, of which natural gas will supply 22 percent, the most of any single fuel source. Renewables and nuclear power will supply 59 percent, with coal and oil meeting the remainder of global needs.

Among the reasons for the acceleration in gas plant construction is the ability of these plants to adjust quickly to accommodate both fluctuations in demand and variable renewable energy supply. For instance, a 570-megawatt 7HA.02 GE combined-cycle power plant powering 500,000 U.S. households can start in less than 30 minutes, ramp up or down at 60 MW per minute and turn down to less than 200 MW while maintaining emissions limits. Such agility is essential to balance out variable wind and solar supply levels. The fact that gas is the most clean-burning fossil fuel — it releases about 50 percent less CO2 than coal and far fewer other pollutants — means it’s also desirable for meeting environmental objectives.

Another factor driving the demand for new natural gas plants is the fact that the up-front capital investment required for a gas plant is less than other options per kilowatt of installed capacity. In the U.S., on average, a simple-cycle natural gas plant costs about $825/kW, compared to $1,100/kW for utility-scale solar, onshore-wind costs of $1,350/kW and $3,025/kW for offshore wind, according to Lazard’s Levelized Cost of Energy Analysis. Installing gas is also a relatively quick process compared to other generation sources — technicians can have a 30-MW simple-cycle plant shipped to a remote area and generating power within weeks.

It is clear that as the world navigates the energy transition, faces the pressing need to tackle climate change and addresses the desire to provide electricity to the nearly 1 billion people without it today, natural gas will continue to be an important part of the global energy portfolio.

Image credit: GE Power