Tracking Progress: Natural gas-fired power
While this is generally in line with the 2.4% annual growth needed to achieve the 2025 2DS target, decline in 2013 and strong regional differences show the fragility of the growth path. While this is well above the annual growth rate of 1.2% needed to achieve the 2025 2DS target, decline in 2013 and strong regional differences show the fragility of the growth path.
Gas-fired power generation in OECD countries recovered from the declines of the previous two years and increased by 7.1% in 2015 to 2 803 TWh. In the United States, 2015 gas-fired power generation reached a new record high (1 374 TWh) with coal-to-gas switching in the country also continuing to be strong in 2016. This trend is in contrast to gas generation in Europe, which remains well below its peak in 2008, despite strong growth in 2015 and 2016. Reductions in Japanese and Korean gas-fired power generation led a 5.7% decline in OECD Asia in 2015. Outside the OECD, gas generation in 2014 increased by 5.6% to 2 540 TWh and growth is estimated to have remained strong in 2015 and 2016. While demand grew in all major regions in 2014, the Middle East was responsible for around half of the increase.
Investments in gas-fired power declined by 40% in 2015 to USD 31 billion, leading to gas capacity additions of 46 GW. Combined-cycle plants accounted for roughly three-quarters of the additions in 2015. The Middle East, China and the United States were responsible for over half of the investment activity. Infrastructure considerations remain the main obstacle to stronger gas-fired power development in many developing countries, because the gas pipeline network needed to take advantage of low liquefied natural gas (LNG) prices often remains underdeveloped. As a result, coal remains the preferred fuel in many regions. In the United States, where gas prices are low and coal plants are being retired for economic and environmental reasons, investments have remained robust, although capacity additions were slightly lower than in previous years.
A major focus of gas turbine design is on flexibility performance, both for new-build plants and for retrofits of existing plants. Improvements in ramping capabilities, start-up times, turndown ratios and part-load behaviour are continuing in parallel with more moderate full-load efficiency improvements. Research on novel thermal coatings and cooling technologies continues to enable higher temperatures and efficiencies. State-of-the-art combined-cycle gas turbine (CCGT) efficiency now exceeds 60%, with expected improvements to 65% efficiency over the next decade. Top open-cycle gas turbine (OCGT) efficiency is at around 42%, up from around 35% in 1990.
The role of natural gas-fired power generation in the 2DS is twofold: first, to provide flexibility to support the integration of renewables, and second, as a lower-carbon alternative to coal-fired generation. Coal-to-gas switching will be of particular importance in the short term until 2025-30 in the 2DS, with strong deployment of both gas turbines and combined-cycle plants at the expense of coal. In the 2DS, gas-fired power generation increases over the next decade by roughly 2.4% per year. While this is markedly lower than the 2.2% observed in 2014 and the average over the last decade (3.9%), the volatility of the growth path over the last several years and pronounced regional differences indicate the fragility of gas generation growth. Additional progress in also needed in efficiency and flexibility performance of plants to provide support for the integration of variable renewables and serve as a short-term, lower-carbon alternative to coal plants, while preventing long-term stranding of gas plants. Gas is, however, increasingly competing not only with coal but also with other low-carbon alternatives that are already contributing to decarbonising the power sector in many regions, such as energy efficiency and renewable power generation.
The competitiveness of natural gas relative to alternative generation technologies in the electricity system is highly dependent on regional market conditions. Carbon pricing, maximum emission caps and strict pollution regulations have proven their ability to establish competitiveness of gas with coal, and technology-neutral competitive mechanisms can ensure electricity supply security. With gas being a source of carbon emissions, R&D should increasingly also focus on gas power generation with CCS, because unabated gas, just like coal, is too carbon-intensive in the long run to reach the 2DS target.
Published: 16 May 2017Download Full Report