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October 1, 2013

Natural gas-fired combustion turbines are generally used to meet peak electricity load

graph of average capacity factors of natural gas combustion turbine plants by NERC region, as explained in the article text
Source: U.S. Energy Information Administration, based on Ventyx Energy Velocity
Note: NERC is the North American Electric Reliability Corporation

In 2012, there were 121 gigawatts of operating natural gas combustion turbines that contributed about 3% of overall electricity generation. The average capacity factors of these combustion turbines varied significantly by time of day and region, as shown in the graph above. Combustion turbines in this article do not include combined-cycle units that operate at higher efficiency than single-cycle combustion turbines.

Peaking units tend to run infrequently for short periods to help electric systems meet peak demand. One way to show the use of these units is to look at hourly unit output data averaged over a year. The chart above shows, for each hour of the day, the average output of all combustion turbines over 2012 divided by the maximum possible output from these units, a ratio known as the plant's capacity factor. Peaking units have much lower capacity factors than baseload units (which are nearly always operating when available) or intermediate load units (which typically run very little at night but have higher capacity factors during the day).

During off-peak demand hours, capacity factors of natural gas combustion turbines averaged well under 5% in most regions of the country other than Texas and the northeastern United States in 2012. Average capacity factors in the Texas Reliability Entity (TRE) and Northeast Power Coordinating Council (NPCC) regions were about 19% in 2012. Natural gas is the marginal fuel for power generation in both of these markets; marginal units are those that set the price for electricity.

Natural gas combustion turbines are usually dispatched in response to price signals. For example, the chart below shows how average generation of the natural gas combustion turbine fleet in the TRE region rose and fell in response to real-time wholesale hourly electricity prices. Generation from these units tended to nearly double during peak hours (3:00 p.m. to 6:00 p.m.) compared to early morning off-peak hours.

Correspondingly, generation was highest when hourly locational marginal prices (LMPs) averaged about $55 per megawatthour (MWh), and generation was much lower when real-time hourly LMPs were about $20/MWh. Natural gas combustion turbines are more expensive to operate than other types of power plants but can respond quickly when needed, so they tend to be used when they are needed to meet short-term increases in electricity demand related to ramping or when loads (and therefore prices) are higher.

graph of ercot average natural gas combustion turbine generation, as explained in the article text
Source: U.S. Energy Information Administration, based on Ventyx Energy Velocity
Note: ERCOT is the Electric Reliability Council of Texas, the grid operator for most of the state. Although organizationally separate from the Texas Reliability Entity (TRE) they cover the same geographic area.

Principal contributor: Chris Peterson