Gas and Power Generation |
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Natural gas is one of the key fuel inputs for electric power generation. New technology, particularly combined-cycle technology, has made the natural gas power plant the energy system of choice in recent years—and gas remains a pivotal fuel of choice for future power plants as well. Gas Plant Advantages: Lower Emissions, Higher Efficiency
The comparative advantages of natural gas power generation include higher efficiency, lower heat rate, shorter construction lead times, and reduced air pollutant emissions compared to other fossil fuels. Noting this, in August 2005 the New England Regional Administrator of the U.S. EPA, in a presentation to the New England Governors’ Conference, observed that “investments in new gas pipelines and 20 new natural gas power plants built since 1998 allowed our power system to meet record electricity demand with fewer air quality violations and no system-wide power shortages." In a May 2010 report, the U.S. Energy Information Administration (EIA) reported on the decline in carbon dioxide emissions nationally in 2009; a major reason was the increased use of natural gas for power generation as opposed to coal use. Observed EIA: "The carbon content of natural gas is about 45 percent lower than the carbon content of coal and modern natural gas generation plants that can compete to supply base load electricity often use significantly less energy input to produce a kilowatt-hour of electricity than a typical coal-fired generation plant. For both of these reasons, increased use of natural gas in place of coal caused the sector’s carbon intensity to decrease."
Gas Seen as Leading Power Sector Input in Coming Decades
Natural gas is positioned to be among the leading fuels for electric power generation in the next decade (and beyond), along with renewables. Gas is also seen as a key fuel input for new technology options like fuel cells, combined heat and power, and distributed generation. Natural gas is also seen as the key “back-up fuel” to offset the intermittency of wind power and other renewables. Gas plants today remain either the first or second-ranked fuel type for new proposed power generation capacity in the generator queues in New Jersey, New York and New England. Environmental legislation on the national level will likely shape this process further, but as the fossil fuel with the lowest carbon content, and with an outlook of abundant North American (and global) supplies, gas appears well-positioned as an efficient fuel with comparatively low carbon content. In a November 2011 report, the North American Electric Reliability Council (NERC) noted: "A large portion of long-term capacity additions are projected to be gas-fired, reinforcing expectations that gas will continue to serve as the primary fuel for electricity generation in North America." Market Challenges
The regional power generation fleet has become highly reliant on natural gas and will likely become more so. There are several unresolved gas generation issues that continue to challenge the market. A central challenge is that most power generators do not contract for firm gas pipeline capacity under their unilateral control and instead rely on "if and as available" gas non-firm capacity, or, in some cases, capacity held by third parties. Pipeline capacity has routinely been added to meet the needs of gas customers who desire firm service and are willing to execute firm contracts for such service. If gas-fired generators are unable to generate electricity due to the unavailability of interruptible pipeline transportation, that, in NGA’s view, is an issue of electric reliability and not natural gas reliability. The majority of gas-fired power generators in New England for example opt for non-firm gas transportation services. The generators observe that the electric market does not provide the proper incentives to encourage them to contract for firm transportation. NGA would like to see solutions to this market dilemma, which causes uncertainty for the entire regional energy market. Also, as many generators are more reliant on interruptible capacity it is extremely critical that parties comply with pipeline operating rules, as well as the pipeline’s tariff-required gas scheduling rules, so that system integrity is maintained to ensure that those customers that do contract for firm capacity receive that service. Another issue is the difference in the timing of commitments for the gas and electric day; efforts are under way on the national level at NAESB to explore means to better synchronize the markets. Electric & Gas Industry Coordination
The natural gas and electric system operators in the Northeast continue to increase communications and coordination. NGA and ISO New England, for instance, jointly administer an Electric & Gas Operations Committee (EGOC) to increase understanding and information exchanges (on publicly-available information). The EGOC includes the NY ISO and PJM as well as other stakeholders. NGA also updates the electric grid operators regularly regarding the coordinating work of NGA’s Gas Supply Task Force. With natural gas remaining a significant fuel going forward for electric generation, coordination efforts such as these – both regionally and nationally – are to be encouraged. For Further Information EGOC Northeast interstate pipelines’ electronic bulletin boards (EBBs) ISO New England New York ISO PJM Northeast Power Coordinating Council (NPCC) North American Electric Reliability Council (NERC) Interstate Natural Gas Association of America (INGAA) North American Energy Standards Board (NAESB) |
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