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NRG CEO: Can’t ‘Rely on Gas for Everything’
The plain vanilla merchant power plant developer/operators of the past need to transform themselves into broader renewable, transportation and natural gas fields in the post-carbon world, according to NRG Energy Inc. CEO David Crane, who spoke to financial analysts in Houston Thursday.
In outlining NRG’s strategies for bigger plays in wind, solar and electrification of transportation, Crane said he sees a vital role for natural gas, but not as the baseload source of electric generation as is touted by the gas industry.
“I am not talking about embracing the view we had back in 1998 of building 200 GW of natural gas-fired combined-cycle generation and talking about gas-fired generation as the new baseload of the future,” Crane said. “Some people in the natural gas industry are now saying we can rely on gas for everything, but I don’t know any power executives that are willing to go there.
“Everyone recognizes that unconventional gas is changing the landscape, but everyone remembers building nothing but combined-cycle plants 10 years ago, thinking the price of gas would stay at $3 or $4/MMBtu forever and then being hurt badly when prices when to $15.”
Crane said a more likely scenario unfolding in the future is a combination of renewables and gas used for firming purposes. He thinks that is going to be a big market, considering that just to comply with the existing state renewable portfolio standards (RPS) — let alone a national RPS — would take 77 GW of wind power, or the equivalent renewables, and a national RPS standard might increase the estimate to 250 GW of renewables.
“The rule of thumb developing in the industry is that for every 2 MW of wind or another intermittent renewable, you need 1 MW of firming capacity from gas, so just with the current state RPSs, we would need another 40 GW of firming gas-fired generation,” Crane said. “That is a market that interests us, and in fact, we have filed for a patent for a new configuration in our gas-fired combined-cycle plants, combining the ability to come online quickly [10 minutes] within a combined-cycle plant so when the entire plant is up and running it is highly efficient.”
Crane said this is part of the opportunities that NRG has been pursuing for some time with its repowering efforts at two coastal plants in California (Carlsbad and El Segundo) and at various sites in New England. He said NRG is hopeful of getting long-term contracts with San Diego Gas and Electric Co. and Southern California Edison Co. for the Carlsbad and El Segundo plants, respectively. The Carlsbad project was recently given a favorable final California Energy Commission staff assessment.
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