Falling costs for renewables and energy storage will squeeze out gas-fired generation in South Australia as early as 2025, Wood Mackenzie and GTM Research find. By then, wind, solar and battery costs are seen decline by 15%, 25% and 50% respectively – hence they offer a “lower cost alternative” to CCGTs, which cover the bulk of South Australia’s base load power today.
Jun 21 – Severe drought combined with an extended outage of the Basslink undersea cable has forced Hydro Tasmania to fire up diesel generators to avert blackouts. Total costs for shipping in more than 100 diesel generators, foregone gas generation and lost electricity sales are estimated to total between $140 million and $180 million, according to Hydro chairman Grant Every-Burns. He warned most of these costs will be reflected in the utilities 2016 financial year, causing a $90 million loss.
Prices for energy storage systems are anticipated to fall by around 10% annually, but “even by 2020 this may still not be sufficient to allow the UK market to grow above 15,000 units per annum, Delta-ee researcher Julian Jansen cautioned. Lessons could be learned from the German or the US model.
Consultations are underway at Whitehall as to whether coal-fired power plants, that are partially retrofitted with carbon capture and storage (CCS), would be allowed to run beyond 2025 – the cut-off date given by the UK's Department for Energy and Climate Change (DECC) last autumn.
Last year marked the first time on record that the average capacity factor of gas combined-cycle plants in the United States exceeded that of coal plants. The capacity factor of the CCGT fleet averaged 56% in 2015, compared with 55% for coal steam power plants.
A triple-whammy of slower electricity demand growth, low natural gas prices, and policies that encourage renewable deployment have depressed the number of gas-fired power plants that are being added to the grid. While wind farm operators receive tax credits, fossil plants struggle to recover their operating costs in the face of falling wholesale power prices.
Lakeland Electric, the third largest public power utility in Florida, says it saved $12 million in fiscal 2015, or about 17% of its annual fuel costs, at unit 3 of its McIntosh power station by making use of GE’s FuelSolv coal treatment technology.
Higher prices of LNG compared to coal and nuclear is prompting two of the biggest importers in Asia to move away from gas generation. South Korea's Ministry of Trade expects gas demand to fall 5% over the next 15 years, while Japan’s nuclear restarts are likely to reduce imports by 4.5% to 85 million tons of LNG in the current fiscal year to March 31.
Though gas demand for power generation and industrial use is on the rise, global gas markets can only accommodate 6 to 7 Bcf per day of LNG exports from the United States in the next 5 years as U.S. gas' price advantage dissipates when liquefaction and shipping costs are added, according to Bernstein Research.
The European Commission has published guidelines to limit regulatory interventions in electricity markets through capacity payments and renewable subsidies with a view of making support schemes more cost-effective. Researchers at the Oxford Institute of Energy Studies criticised, however, "the guidance ....shows little sense of the urgency needed to address the increasingly dire situation of conventional back-up capacity for intermittent renewables."