NGI The Weekly Gas Market Report / NGI All News Access

Gas Turbines on the Rise, According to EVA

Gas Turbines on the Rise, According to EVA

Developers in 2000 set an all-time record in the United States for production of megawatt capacity from natural gas-fired turbines. The interesting part about the new record is that it is expected to be more than doubled in 2001, according to a new study conducted by A. Michael Schaal of Energy Ventures Analysis, Inc. (EVA).

The study shows that 23,830 MW of new gas turbine-based capacity was built during 2000, up from 6,400 MW which was constructed in 1999, and 1,200 MW put in place in 1998. Added turbine-based capacity is forecast to increase by 53,800 MW during 2001, and by up to 82,800 MW in 2002. Expanding on the record set for 2000, EVA estimates it represents a $10 billion investment that will power over 22 million homes, approximately 8% of all U.S. homes. Schaal added that five to six projects became operational during each month of 2000.

And the growth is expected to continue at break-neck pace. Schaal said that in the last quarter alone there has been a 14% increase in projects to be built between 2000 and 2005. Currently, 262,842 MW are scheduled for construction over the next five years. For the five-year period, Kentucky and South Carolina enjoyed the sharpest increase in planned generation over last quarter's study. Kentucky's additions rose from 1,676 MW to 3,766 MW, while South Carolina went from 1,850 MW to 3,257 MW. Even with all of the positive statistics, the consultant warns there are hurdles down the road.

"Higher fuel prices are but one risk that developers face," said Schaal. "We will continue to monitor the progress of those projects under development." The EVA said that scenarios including market re-regulation and over-shooting demand could also turn financing sour for project developers, killing the growth momentum in the industry.

Of the planned generation sites for the recent surge of turbines, EVA singled out California as "missing in action." Schaal found that planned electric generation in California is lagging far behind current and future needs.

The California Independent System Operator (ISO) anticipated that to get around the supply issues experienced during the summer of 2000, and to be ready for the growth in demand during the summer of 2001, the system needs an additional 1,800 MW. The ISO, in an effort to get plants built quickly, labeled the facilities needed as "temporary" to get around the lengthy permit process. Schaal said that of the nine projects proposed initially to help meet the goal, six have been withdrawn, leaving California only an additional 371 MW of new capacity. The consultant listed numerous roadblocks to the new generation, such as revenue caps for plant owners and environmental complaints on siting.

Elsewhere around the nation, the EVA cites better technology and deregulation as major reasons for the sharp increase in gas turbine production.

For more information on the most recent study, "Tracking the Building Boom of New Power Plants in the U.S.," contact Schaal at 703-276-8900.

Alex Steis

©Copyright 2000 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus