Natural gas combined-cycle power plants increased utilization with improved technology
The average utilization rate, called capacity factor, for the entire U.S. fleet of combined-cycle natural gas turbine (CCGT) electric power plants has been generally rising, increasing from 40% in 2008 to 57% in 2022, as the operating efficiency of new CCGT units has improved. The increased efficiency improved the competitiveness of newer CCGT units against other fuel sources, as well as older CCGT units, to generate electricity.
Two factors affect the utilization of a CCGT: the efficiency of the generator and the delivered cost of natural gas. More advanced H- and J-class natural gas turbine technology entered the market in the early 2010s, contributing to an increase in the efficiency of newer natural gas-fired power plants. Lower natural gas prices typically lead to higher capacity factors at natural gas-fired power plants because the electricity generated becomes cheaper than other electricity generation sources, such as coal. In 2012 and 2015, annual average capacity factors increased by more than seven percentage points in periods when the annual Henry Hub natural gas price declined.
Grid operators generally dispatch generators sequentially from lowest to highest cost. Because CCGT units built from 2010 to 2022 generally have the lowest operating costs, they are dispatched more frequently compared with older CCGT power plants. In 2022, the average capacity factor of CCGT units that began operations between 2010 and 2022 was 64% compared with 55% for those that began operations between 2000 and 2009 and 35% for units that began operations between 1990 and 1999.
About half of today’s CCGT capacity was built from 2000 to 2006. This sudden increase in CCGT plants was in response to power shortages that occurred in the late 1990s, along with the introduction of new and more efficient first generation F-class natural gas turbines to the market. Now, many of these CCGT plants are about 20 years old, which could lead to lower capacity factors as the units age.
Lower heat rates reflect the increased efficiency of newer CCGT power plants. Heat rate is the ratio of the amount of fuel required to generate a unit of electricity. CCGT power plants built between 2010 and 2022 demonstrate the lowest average heat rate among the entire fleet at 6,960 British thermal units per kilowatthour (Btu/kWh) in 2022, which is 7% lower than units built between 2000 and 2009. The average heat rate in 2022 for plants built between 2000 and 2009 was just under 7,479 Btu/kWh. This average heat rate is about 17% lower than the average heat rate of units built between 1990 and 1999.