Dive Brief:

• Construction costs for combined cycle gas facilities have been coming in below budget for Duke Energy, with the company's 625-MW Sutton facility in North Carolina costing 8% below initial estimates, according to Platts.
• The new facilities are now regularly showing up with costs less than $1,000/kW.
• The U.S. Energy Information Administration expects combined cycle plants coming online in 2020 to have a levelized cost of about $14/MWh, compared with $60/MWh for conventional coal resources.

Dive Insight:

The cost to construct and operate combined cycle gas facilities is falling, Platts reports, in a detailed look at the pricetag on several plants completed recently. Duke Energy Progress told the outlet the final cost of its Sutton facility in North Carolina was $551 million, compared with the initial estimates of more than $670 million.

That means Duke paid only $882/kW at Sutton, compared to the initial estimates of $1,073/kW. Costs under $1,000 are increasingly becoming the norm, Platts notes. Florida Power & Light expects a massive 1,277 MW facility at Port Everglades to come in around $670/kW.

EIA, in its 2015 Annual Energy Outlook, predicts that from a levelized cost of capital standpoint combined cycle facilities coming online in 2020 will return the cheapest power. Conventional combined cycle plants are projected to have a cost of about $14.4/MWh, compared with about $60/MWh for conventional coal and almost $100/MWh for coal with carbon capture and sequestration technology.

But EIA also cautioned that its estimates do not account for fluctuations in fuel price, which can vary widely. "Although levelized cost calculations are generally made using an assumed set of capital and operating costs, the inherent uncertainty about future fuel prices and future policies may cause plant owners or investors who finance plants to place a value on portfolio diversification," the agency said.