Natural Gas Power Makes America Move Like A “Tremendous Machine”

Tom Shepstone
Shepstone Management Company, Inc.

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Natural gas power dominates in every way, fueling so much of everything about our lives today as it has made the electricity vital to us all.

One of the greatest of thrilling moments in sports history has to have been when Secretariat won the Belmont Stakes and the Triple Crown of Horse Racing in 1973. Watching this beautiful horse move out as jockey Ron Turcotte simply let him run was, as the broadcaster yelled, “like [watching] a tremendous machine,” at about 1;40 in the video below. I’ve watched it dozens of times because the action is so smooth, so powerful and so incredibly stunning. Such has been the rise to dominance of natural gas power in this country.

That rise to power came with the glorious shale revolution. It increased the availability and reduced the price of clean natural gas, giving power generators two powerful reasons to use it. Now, natural gas power dominates, as this story yesterday by David Manowitz in Today In Energy reveals. This chart for the lower 48 states tells all:

natural gas powerSee that 45% on July 27th? Well, it went even higher for the U.S. as a whole and set a record, reports EIA (emphasis added):

In the United States, natural gas consumed by electric power plants (power burn) set a daily record high of 47.2 billion cubic feet (Bcf) on Monday, July 27, according to S&P Global Platts estimates. Consequently, on the same day, natural gas-fired generation in the Lower 48 states also reached an all-time high of 316 gigawatts (GW) in the late afternoon, according to the U.S. Energy Information Administration’s (EIA) Hourly Electric Grid Monitor.

Before July 27, 2020, the record for U.S. natural gas power burn to generate electricity stood at 45.4 Bcf, and it was set on August 6, 2019. Natural gas power burn exceeded 45.4 Bcf per day on seven days in July 2020 and one day in August. Electricity demand in response to high summer temperatures throughout much of the country, relatively low natural gas prices, the start of new natural gas-fired capacity, and greater use of existing natural gas-fired capacity have contributed to increased natural gas consumption in the electric power sector.

Notice renewables accounted for but 12% and another EIA chart found below and here shows that on Monday of this week, at the point of highest electricity generation, hydroelectric power accounted for more than solar (3.2%) and wind (3.3%) generation combined and natural gas power represented 46%.

natural gas powerHere’s more from the EIA:

Natural gas is a key power generation resource because it has the flexibility to supply electricity at any time, including at times of peak demand. In contrast, some renewable energy technologies and nuclear power plants may be nondispatchable and not able to adjust their generation to meet load. For example, nuclear power plants may already be running at or near maximum capacity and may be unable to respond to shifts in load.

The U.S. electric power sector has been moving toward more natural gas-fired and renewable-powered generation and away from coal-fired and nuclear-powered generation during the past several years. For example, between 2011 and 2019, 103 coal-fired power plants with a total of 22.2 GW of capacity were replaced by or converted to natural gas, primarily in the eastern half of the country.

From January 2019 through May 2020, the United States added 13.8 GW of new natural gas-fired net summer capacity and retired 5.4 GW. The net change of 8.4 GW is second only to the 12.6 GW added for onshore wind turbines since January 2019, according to EIA’s Preliminary Monthly Electric Generator Inventory.

Combined-cycle power plants have generated most of the new natural gas-fired capacity, using the latest high efficiency natural gas turbine technology. The retired natural gas-fired plants were less efficient steam plants or combustion turbines. This change has allowed the fleet of natural gas-fired generators to provide more electricity for a given level of natural gas consumption.

This is excellent data but an additional point also needs to be made. While more on-shore wind capacity was added than natural gas power, that is largely irrelevant because wind, for the reasons stated in the first paragraph of this quoted section, has a very low capacity factor, often in the neighborhood of only 25%, whereas combined-cycle gas plants can operate at as much as 65% or even higher. This means 12.6 GW of wind capacity can produce maybe 3.3 GW of actual wind power, whereas 8.4 GW of combined cycle capacity can yield up to 5.5 GW of gas power in terms of actual electricity generation and the less renewable energy, the more efficient gas plants are. Moreover, we don’t know how much wind capacity is replacement and some facilities are being replaced.

The picture for gas power, therefore, is getting better looking forward, despite new heavily subsidized wind and solar capacity additions. Yes, natural gas power is “moving like a tremendous machine” as Belmont Stakes announcer, Dave Johnson, put it 47 years ago when Secretariat “won by 31 lengths, the largest margin of victory in Belmont history, in front of a crowd of 69,138 spectators. His winning time of 2 minutes and 24 seconds still stands as the American record for a mile and a half on dirt.” Natural gas-fired power, as I noted above represented 46% of all power generated on Monday and hydro, solar, wind and “other” combined amounted to 15%. That’s a lead of 31% for gas. You see what I mean…a 31 length lead for Secretariat and a 31% lead for natural gas, America’s two “tremendous machines.”

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2 thoughts on “Natural Gas Power Makes America Move Like A “Tremendous Machine”

  1. Great analogy using the Secretariat win at Belmont for natgas’ ongoing contribution to American electricity generation.
    (At an average speed of over 37 mph for 1 and 1/2 miles, Secretariat’s achievement has been ranked as the alltime #1 feat in all sports by several observers, including Sports Illustrated).

    It should be noted that ‘only’ 65% capacity factor for CCGPs is somewhat misleading as it conflates utilization with nameplate capacity.
    Specifically, these plants regularly operate at ~100% capacity for, maybe, 14/15 hours per day. This will be in the high demand hours of mid morning and late afternoon/early evening.
    This correlates to the daily high pricing (aka high revenue) windows for the power producers.
    (This can easily be seen on the PJM, New England, and New York ISO websites. ‘Day Ahead’ pricing is what the producers are guaranteed payment in 5 minute increments of Megawatthours).

    When the plants are not burning fuel – and, thus, generating revenue – they idle with with a tiny onsite workforce … usually ~24 to 30 for massive 1,000/1,400 Mw plants.
    For forward looking folks, this model is expanding rapidly across the globe as Vietnam, Brazil, the Philippines, et al are showing with their huge, huge buildout of Combined Cycle Gas Plants.
    The Gas to Power model is facilitated by FSRU technology (Floating Storage and Regasification Units).

    LNG producer (future, potentially) Tellurian just stated that $5/mmbtu is the break even point for them to operate. This low pricing will devastate competing suppliers (including Qatar LNG) as operational/supply costs and/or governmental revenue needs FAR exceed that number.

    Appalachian natgas is already at the forefront of economical global supply due to the natural abundance and the exceptional operating perfornance of your region’s producers.
    Biggest threat to your long term prosperity is damaging, misguided governmental policies.

  2. Horses for most practical uses were gone by the 1920s, just a bit after my great grandfather stopped shoeing them. Except for sporting affairs for the elites.

    Coal was king for electricity and oil for transportation. Natural gas is a newcomer preceded by manufactured gas. We can be quite sure it too will give way to something more suited to the modern world – the same way working horses, coal and manufactured gas did and and oil will.

    Nothing lasts forever.

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