As the world continues to shift towards cleaner forms of energy, it may seem counter-intuitive to advocate for a second dash for gas. However, natural gas still plays a critical role in meeting our energy needs, and ramping up demand for gas turbine power generation could help meet the growing demand for electricity while reducing carbon emissions.

Gas turbine power plants are highly efficient and flexible, able to ramp up quickly to meet peak demand and integrate seamlessly with renewable energy sources like wind and solar. In fact, many experts believe that gas-fired power generation will play an increasingly important role in balancing the intermittency of these renewable sources.

Moreover, natural gas is a relatively clean-burning fossil fuel, emitting significantly less carbon dioxide than coal or oil. While natural gas is not a long-term solution to climate change, it can serve as a bridge fuel to help us transition towards a more sustainable energy future, especially combined with post combustion carbon capture and storage systems.  The system ancillary services (e.g., frequency control and load levelling) that the cost effective bulk power Combined Cycles can deliver, is almost certain to be a major part of the near term energy grid.

Natural competitors to this approach include grid scale energy storage, however its unclear what the winners will be and its likely that a mixed approach will emerge. For example, it seems likely that battery storage will be competitive in grid support and high-cycle short term storage while clean bulk power (e.g., CCGT plus CCUS) will prove competitive in the longer cycle (hours) operation.

The existence of permitted sites, grid connections, etc., i.e., continued use of established powerplants, is of huge value compared with the project development time and cost of re-purposing sites or establishing new plants – hence the incumbent plant always has a starting advantage.

Of course, we must ensure that any expansion of gas turbine power generation is done responsibly and in conjunction with increased investment in renewables, energy efficiency, and carbon capture and storage technologies. But if we can strike the right balance, a second dash for gas could help us meet our energy needs while reducing our environmental impact.

According to a report by the International Energy Agency (IEA) in 2019, the average age of gas-fired power plants worldwide is around 20 years. However, there is a trend of upgrading and retrofitting the existing plants instead of building new ones. This can extend the life of gas turbines for up to 30-40 years.

The IEA states that, the installed gas turbine capacity worldwide is around 1,400 GW (gigawatts). The largest regions for installed gas turbine capacity are Asia and North America, followed by Europe and the Middle East.

The average capacity of a Combined Cycle power plant is typically between 500MW to 800MW (IEA), so this installed base of gas turbines represents about 2000 to 3000 installed utility scale gas turbines.  20+ year old units will require upgrades including control systems (obsolescence and performance driven) and combustion systems (fuel switching and reduced emissions limits) in order to continue to run. If 25% of the ageing fleet commits to mid-life upgrades/major overhauls per annum, this is could be >500 major investment projects pa – valued at $5m to $15m a time.

So, the through-life investment in these units is likely to continue to represent a significant market.

The potential new build market will be based on the rate of replacement of retired units plus any new plant developments. As one scenario, consider the maintenance of existing capacity, by renewal. This could be of the order of 2000 utility scale units over the next decade i.e., 200 pa on average. This rough assessment excludes the units below ca 300MW. If this scenario is realised, it could represent plant investment of >$15Bn per year on new plant (at $800/kw for CCGT plant). Service revenues for the new plant, may exceed this during the plant life.

Conclusion – we may well be on the approaches to a gas turbine powerplant market uplift that could look a bit like a ‘Dash for Gas II’.  Food for thought…

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March 2023