High temperatures are putting the grid to the test this summer. As is usually the case during high load events, natural gas-fired units have stepped in to meet demand. Increased investment over the past two decades in high-efficiency combined cycle natural gas-fired power plants has allowed this to be the case, but this increase is declining. However, while new gas plants have come to market, older, less-efficient plants still remain a material part of the stack. That will change, as we will see in today’s Energy Market Insight, as many legacy gas plants are scheduled to be retired in the coming years.
Most retirements that have made headlines recently have been those surrounding coal-fired plants. Up until this year, there had been a trend of coal-fired retirements accelerating as operators and utilities strove to meet decarbonization targets. However, that came to halt this year as the Department of Commerce’s anti-dumping investigation tapped the brakes on many of the solar projects slated to replace retiring coal capacity. The graphic below illustrates this pattern with data for this year all but reversing the recent trends of accelerating retirement dates.
Flying under the radar has been the more than 275 gas-fired units, totaling 43 GW, that are set to retire. These retiring plants equate to about 8% of the US’ current natural gas fleet. The map below shows that there is no discernable geographic pattern to these retiring plants, other than they are sited relatively close to population centers, a hold-over from the US power grid’s historic evolution.
That idea of legacy or history is an important one when discussing retiring natural gas power plants. On average, the plants that are retiring are currently 41 years old, and the vast majority of them will be 50+ years old when they eventually retire, as seen below.
With those higher ages often come inefficiencies that make it difficult for these plants to compete in deregulated markets. New natural gas generators that have come online over the past two decades brought expectations of combined cycle heat rates falling below 8 MMBTU/MW. Comparing that to the average 12.8 MMBTU/MW heat rate of retiring gas units highlights the technological advances made in the industry. However, a handful of units in the graphic below actually fall below the recent, more-efficient gas plant averages. This is due to these units being relatively young where retirement dates have been announced far in advance (20+ years).
These retiring units illustrate the continuing evolution of the US’ energy mix. Currently, there are 104 GW of wind and solar projects in advanced stages of development and more than 155 GW of natural gas and coal capacity scheduled to retire. These changes will affect the tools at grid operators’ disposal as they try to balance their respective regions under increasingly challenging circumstances. To dive deeper into firm capacity additions and retirements, request a free trial of BTU Analytics’ Power View platform.