Natural Gas Keeps Electricity Cheap and Plentiful in Pennsylvania

Tom Shepstone
Shepstone Management Company, Inc.

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Natural gas fired generation of electricity has been a huge win for Pennsylvania thanks to Marcellus Shale development.

An article yesterday at Today In Energy reveals an important but seldom appreciated fact about about natural gas; that an electricity generating facility using it can achieve capacity factors of over 70%, which is more than twice that of solar and wind,

Moreover, gas-fueled power plants can dispatch electricity whenever needed and the efficiency of the equipment is getting better every day. Gas is king when it comes to electricity generation and for a very good reason. And, outside Texas, Pennsylvania is king in producing the stuff, giving tremendous comparative economic advantages to the Commonwealth in relation to other Northeast states.

natural gas

Here are the key points from the Today In Energy article by Scott Jell:

The rapid development of shale gas resources in Pennsylvania, Ohio, and West Virginia has contributed to sustained low natural gas prices and encouraged the construction of natural gas-fired power plants. About one-third of the new natural gas-fired generating capacity built in the United States since 2010 is located in PJM Interconnection (PJM), the grid operator for all or parts of 13 states in the mid-Atlantic region, including Pennsylvania, Ohio, and West Virginia. In 2020, the utilization rate, called capacity factor, of natural gas-fired combined-cycle (NGCC) units built from 2010 to 2020 in PJM was 71%, which was higher than that of older units in the region.

Two factors affect the utilization of a combined-cycle natural gas generator: the efficiency of the generator and the delivered cost of natural gas. Newer NGCC generators use more efficient turbine technology and are generally larger than older units. Although all NGCC generators tend to increase or decrease utilization in response to changes in the price of natural gas, older units tend not to be used when natural gas prices rise because they are less efficient and more expensive to run than newer technology units…

Grid operators, such as PJM, dispatch generators sequentially from lowest to highest cost. Because NGCC units built from 2010 to 2020 generally have the lowest operating costs, they are dispatched more frequently. Because of their lower efficiency, units built from 1990 to 1999 have higher operating costs and are more likely to be the marginal generators in the dispatch order, meaning they are the last combined-cycle generators to be dispatched.

This information is why the PJM Interconnection is so concerned about going too green as Tom Trust-Funder Wolf wants to go to impress his prep school friends and other elitist brethren. It’s all about virtue signaling with him, but Pennsylvanians need cheap plentiful energy and clean natural gas has provided it in a way wind and solar never can.

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