SNL: Lower operating costs drive new gas-fired power development

Dive Brief:

Analysis from SNL Energy shows planned plant additions in the United States closely track operating costs, with the end result being new combined-cycle capacity is still outpacing individual renewable technologies.
Solar, wind and the more-efficient gas plants will combine to make up 84% of capacity additions through 2020, according to SNL's analysis.
Federal agencies have only recently begun collecting data on power plant construction costs, and in 2013 the cost of building a new combined-cycle plant was roughly half that of a wind farm on a per-kilowatt basis.

Dive Insight:

Coal plants are still cheap to operate, but the days of new capacity additions are over for that fuel. Coal capacity made up 80% of retirements last year, according to the U.S. Energy Information Administration.

But for viable fuel types, new additions are closely tracking the cost to operate them, according to SNL. The energy news and data firm reports there are almost 73,000 MW of combined-cycle capacity expected through 2020, and operating costs fell to $28/MWh last year.

Wind is expected to add more than 51,000 MW through the same time frame, and operates at a fraction of the cost. Solar is expected to add more than 19,000 MW. Operating costs for those renewable fuels are about $9/MWh and $17/MWh, respectively.

In addition to relatively low operating costs, gas plants are cheaper to construct than renewables, according to the EIA.

In 2013, the first year for which the agency collected data, natural gas generation on a capacity-weighted basis averaged $965/kW, compared with $1,895/kW for wind and $3,705/kW for solar. More than 7,400 MW of gas capacity was added that year, compared with 2,600 MW of solar and 860 MW of wind.

Within gas plant technologies, EIA said there were 3,745 MW of combustion turbine generation installed at a cost of $728/kW; the plants are typically used for peaking generation. Combined cycle plants cost $1,110/kW, and there were 3,587 MW installed that year.

But the cost to install renewables is dropping, A recent report from the Lawrence Berkeley National Laboratory concluded that since 2015, the national median installed price for residential solar systems have fallen 5%, while non-residential systems have seen costs drop between 7% and 9%. Utility-scale solar has fallen the most, totaling 12% since last year. And the price of building solar power plant generation has fallen 60% since 2009.