Impact of Coal Displacement by Natural Gas on Unit and System Operations
Stan Kaplan, U.S. Energy Information Administration, 202-586-5114,
Overview
Low natural gas prices and other factors have resulting in substantial displacement of coal-fired generation by gas-fired plants. Previous research by the author (CRS Report R41027, Displacing Coal with Generation from Existing Natural Gas-Fired Power Plants, January 19, 2010) investigated the potential for gas displacement of coal by combined cycles with low capacity utilization. Now that displacement is a fact, a variety of topics are analyzed in more detail, including: The characteristics of the combined cycle and peaking units that have increased output, the characteristics of the coal plants that have reduced output or retired, effect on hourly unit dispatch (e.g., the extent to which displacement is concentrated in certain times of the day), and the proximity of coal plants that have reduced output and gas-units that have increased output (a surrogate for the capability of the transmission grid to switch-out plants that are close or distant).
Methods
The analysis is based on EIA monthly data on fuel costs, tested and operating heat rates, fuel consumption, unit characteristics, and environmental control equipment; and hourly operating data that can be extracted from the Continuous Emission Monitoring System data collected by U.S. EPA. The analysis also makes use of GIS analysis of unit locations and proximity. Coal and gas plants are compared using several metrics including proximity, fuel prices (especially marginal prices), unit characteristics (e.g., age and efficiency), and dispatch. The comparisons (unit by unit and for groups) uncover insights into how the low cost of natural gas and coal market uncertainties have driven the changes in coal/gas dispatch.
Results
As determined via the prior research cited above, the potential for gas displacement of coal is large and the main potential constraining factors are the ability to move power across the grid and to reduce coal unit output without causing system stability issues. This research adds more detail by measuring the actual impact of displacement on system and unit operations.
Conclusions
The research assists analysts in determining the true potential, at least in the short to medium term, for coal displacement by gas. This has implications for many areas of interest, including demand for natural gas, need for transmission system upgrades, and the viability of existing coal units.