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1 in 7 newer combined-cycle plants are little-used, analysis finds

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1 in 7 newer combined-cycle plants are little-used, analysis finds

This article is the first of a two-part series examining trends in gas plant capacity factors since 2008. The first focuses on combined-cycle technologies. The second covered gas-fired combustion turbines and steam turbines.

Nearly one in seven U.S. combined-cycle power plants fewer than 20 years old are little-used, according to an S&P Global Market Intelligence analysis.

The more than 33,000 MW of generating capacity is concentrated in California, Texas and the northeastern and mid-Atlantic U.S., but units are also in places such as Missouri and Wyoming. Some units are being used less because of older designs that leave them less efficient compared to others, while other units are challenged by market conditions that favor zero-emission resources such as solar, wind and batteries.

Nonetheless, more than 15,000 MW of new combined-cycle capacity is scheduled to begin operating by 2020 in part to support the grid as more variable generation technologies are integrated.

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Power plant usage is measured by its capacity factor, an efficiency metric that reflects a unit's actual generation over that amount it could have generated if it ran at maximum for a specified time period. The units comprising the 33,000 MW in this analysis have capacity factors below 40%, while the national average for combined-cycle technology in 2018 was 53%, based on an analysis of plants that filed monthly generation output to the U.S. Energy Information Administration.

In the active PJM Interconnection market, combined-cycle units averaged a 60% capacity factor in 2018, up from 58.4% the year before, according to a 2018 State of the Market report published by the grid's market monitor, Monitoring Analytics.

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Among the 10 combined-cycle plants less than 20 years old with the lowest capacity factors, four are in California. One is General Electric Co. subsidiary GE Energy's Inland Empire Energy Center in Riverside County. The company in June decided to shut down a 376-MW unit after 10 years of operation. A spokesperson said the facility is built with GE's legacy H-class turbine technology, and the plant was uneconomic to retrofit with more flexible technology. Another unit of similar size was retired in 2017 after seven years of operation.

Some combined-cycle units in California are facing additional challenges now that state law targets 100% zero-carbon electricity by 2045.

Wholesale power prices in the California ISO market, pushed lower by the growth of solar and zero-emission alternatives, have also made it harder for less-flexible gas plants to earn enough revenues. The 1,028-MW La Paloma Generating plant in Kern County faced bankruptcy in 2016 after running for just 13 years, and it had a capacity factor of 11.8% in 2018.

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In the ISO New England market, the 1,700-MW Mystic River 8 and 9 units in Massachusetts, owned by Exelon Corp. subsidiary Exelon Power, had a 30.5% capacity factor in 2018 but remain online after the Federal Energy Regulatory Commission approved a cost-of-service contract to keep the units in use for reliability purposes through 2024. The 623-MW Newington Energy Center in Rockingham County, N.H., is among the 10 plants with the lowest capacity factors, at 14.7% in 2018, compared to 52.8% a decade earlier.

While lower efficiency rates can indicate units becoming uneconomic, they do not necessarily signal an upcoming retirement. "We have not done a detailed forward look, but based on history, we don't believe gas combined cycles will retire," PJM's market monitor, Joe Bowring, said in an interview, adding that the net revenues for these technologies have penciled out even when PJM power prices were low, like in 2016.

Still, PJM has also seen 425 MW of combined-cycle capacity retire recently, including the Bellemeade Power Station in Virginia earlier this year after 22 years of operation and Bayonne Cogeneration in New Jersey, which was 30 years old, in 2018.

Existing combined-cycle capacity will also have to compete with new units being built with advanced designs and better efficiency. The U.S. has another 15,250 MW of new combined-cycle capacity coming online in 2019 and 2020. A June 3 government survey noted that about a third of new units coming on through 2020 will incorporate the Frame-H advanced turbine design, whose installed costs can be up to 30% lower than conventional combined cycles, according to a blog post by the EIA.

Plants that began operating in the first half of 2019 are using a mix of technologies. For example, Calpine Corp.'s York 2 Energy Center in Pennsylvania was built with GE Energy's F-class turbine technology. On June 27, Public Service Enterprise Group Inc. started up the Bridgeport Harbor Station Combined-Cycle Project in Connecticut employing GE Energy's H-class turbine technology.

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