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Today in Energy

June 7, 2011

Recent mix of electric generating capacity additions more diverse

Sources: U.S. Energy Information Administration Forms EIA-860 and EIA-860M
Note: data for 2010 are preliminary.

Power plants fueled by natural gas have been the main source of additions to electric generating capacity over the past 15 years. Since 1995, 80% of new capacity has been gas-fired units. Recently, the mix of electric generating capacity additions has become somewhat more diverse, reflecting a combination of natural gas, wind, and some coal-fired capacity. Since 2005, annual electric generating capacity additions ranged between 12 and 21 gigawatts (GW), significantly below the rate of capacity additions between 2000 and 2004.

Natural gas combined-cycle plants accounted for about 68% of the total natural gas-fired capacity added between 1999 and 2010. Several factors accounted for the big increase in natural gas combined-cycle plant construction: relatively low capital costs, favorable emissions attributes, reliance on an abundant natural gas resource base, access to a flexible and expanding natural gas pipeline network, short construction lead times, and relative ease of siting.

The construction boom for natural gas combined-cycle plants between 2000 and 2004 created excess generating capacity. Though intended to run 50 to 70% of the time, average use of many natural gas combined cycle plants lagged for years. In 2003, for example, natural gas combined-cycle plants operated only about 34% of the time. Modest growth in overall electricity demand over the past decade and the significant rise in natural gas prices from 2003 through 2008 contributed to the low utilization rates. Improving capacity factors at coal-fired facilities and uprates at nuclear facilities also played a role in limiting the use of gas-fired plants.

Recently, new patterns in natural gas combined-cycle plant dispatch are emerging. Because of shale gas development that has resulted in significantly lower natural gas prices, natural gas generation is increasingly competitive with coal-fired generation in some Eastern U.S. markets. Gas use for power generation has been growing in markets traditionally dependent mainly on coal and nuclear generating capacity for baseload power needs.