Gas-Fired Power Plants: The Future of Electricity or Bridge to Clean Energy?

While the number of gas-fired power plants has been rising in the Appalachian basin and more coal-fired plants are retired, a new report indicates that a “tipping point” has been reached.

The report from the Rocky Mountain Institute determined that the cost of clean energy portfolios – a mix of solar, wind and battery storage – has fallen dramatically, while the reliability of such a mix has improved to the point that it is a viable alternative to gas.

“Within the next 10 to 20 years, continued cost declines will allow new CEPs to undercut the operating costs of existing gas plants,” a summary of the report states. “However, U.S. utilities and independent power producers are replacing retiring, nuclear and old gas capacity on a nearly 1:1 basis with new gas-fired power plants – nearly 70 GW of capacity is announced for construction within the next five years.”

The U.S. Energy Information Administration, in its 2019 energy outlook, also noted that while coal and nuclear power generation will decline from 28 percent in 2018 to 17 percent in 2050, natural gas is projected to rise from 34 to 39 percent and renewable increases from 18 to 31 percent.

“Assumptions of declining costs and improving performance make wind and solar increasingly competitive compared to other renewable resources,” the report states.

There are now eight natural gas power plants in Pennsylvania, and another eight are in the planning or construction stages, according to information from the Independent Petroleum Association of America. In Ohio, four plants are operating and seven more are under construction or being planned. Three plants are in the planning stages in West Virginia.

The RMI report suggests that the economics of such gas-fired plants may not be good. “Over 90 percent of proposed gas-fired capacity would be more expensive than an equivalent CEP,” the report noted.

“If built, owners of these gas assets will face tens of billions of dollars in stranded costs with uncertain future revenues as clean energy continues to fall in price,” it states.

The EIA reports that power produced by natural gas power plants has risen steadily, reaching almost 11 trillion Btu in 2018. Meanwhile, the amount from coal-fired plants has fallen steadily. And power from renewable energy, while still small compared to coal and gas, is also on the rise, reaching more than 6.4 trillion Btu in 2018.

Pennsylvania has seen a surge of interest in natural gas power plants, and the trend is likely to continue. Pennsylvania is the nation’s second-largest supplier of natural gas. Because the supply is abundant, natural gas pricing in Pennsylvania has remained low, making it an economically viable fuel source for electricity generation.