As the power industry continues to shift natural gas as a cheap and abundant fuel, coal generation facilities are considering coal-to-gas conversion or gas co-firing solutions in lieu of new generation capacity. Many coal-to-gas conversions have been completed over the last several years, and current trends signal that this will continue through 2021.
Owners must consider the costs and risks of switching, especially in light of fluctuating gas prices. While gas conversions are typically less capital intensive than developing new generation, the latest generation of combined cycle power plants have heat rates 40 to 50 percent lower than a typical converted coal plant. This means that converted plants will have much higher fuel costs on a kilowatt hour (kWh) basis and have a greater exposure to risks associated with fluctuating gas prices. In addition, the economics of a coal-to-gas conversion depends on how a market values capacity. In PJM and ISO New England, where a capacity market exists, it may be logical to do a conversion so that the facility can collect capacity payments or rent with low capital expenditures. This is also true with regulated utilities. If an owner is simply looking for capacity value but not energy, a conversion could serve as an economically viable option.
As the leading installer of gas-fired generation capacity, Kiewit leverages our experience to help utilities consider potential costs and risks from all angles. Factors to consider include real time labor and productivity rates, plant performance and emission impacts, equipment modifications and upgrades, and access to adequate gas supply. If a coal-to-gas conversion solution is selected, our engineering teams can perform detailed studies and develop boiler and balance of plant gas modification plans that meet cost and schedule targets. With detailed planning and a clear view into all potential costs and risks, coal-fired assets can successfully and economically transition to gas and remain competitive for the long term.
About the Author:
Dan McGee is Director of Plant Services within Kiewit’s Engineering Consulting group. His career in power and energy over the past 25 years includes extensive experience in implementing studies, environmental reviews, detailed engineering, facility evaluations, operational support and predictive diagnostics for a variety of clients. Dan is responsible for Kiewit’s market expansion in existing plant services retrofit work and small consulting projects.