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Natural gas is the single-largest source of energy used to generate electricity in the United States, making up 43% of electricity generation in 2023. Natural gas-fired power plants accounted for the second-most U.S. generating capacity additions in 2023, trailing only solar. Combined with increasing domestic supply and relatively low natural gas prices, the versatility of natural gas-fired power plants to meet a wide range of requirements across many U.S. markets is one of the main reasons for their growth. However, the dispatchability, efficiency, and broad regional coverage of natural gas-fired power plants vary significantly. In addition, decades of advancements in natural gas turbine efficiency mean that the age of natural gas-fired plants affects how those plants are used.
Nearly all natural gas-fired power plants are dispatchable, meaning that they can reliably be called on to meet power demand when needed by the grid. The flexibility of natural gas-fired generation is supported by the four different technology types used in these plants: combined-cycle gas turbines (CCGT), simple-cycle gas turbines (SCGT), steam turbines (ST), and internal combustion engines (ICE). In addition to the type of equipment, plant configurations and operating approaches differ among the technology types. In 2022, CCGT plants made up the largest part of the natural gas fleet, followed by SCGT, ST, and ICE.
CCGT plants are highly efficient, which allows them to generate low-cost power over extended periods, and they are configured to provide power to serve base and intermediate load. The three other plant types (SCGT, ST, and ICE) are used mostly to meet peak demand on the electric grid and so run less frequently. These three sources can start and ramp up to full power quickly, which is critical in markets with an increasing concentration of intermittent renewable generation.
In 2023, operators added 9,274 megawatts (MW) of new natural gas turbine generating capacity to the power grid in the United States. This total consisted of 7,376 MW of capacity from CCGT plants, 1,756 MW from SCGT plants, and 142 MW from ICE plants. No capacity from ST was added in 2023.
The different types of natural gas-fired power plants technologies lead the plants themselves to have different operating rates, or capacity factors, among the technologies. A capacity factor is the ratio between the amount of generation over a period of time and the generating capability of a power plant.
CCGT plants, with higher efficiency, typically run more than half of the time and had a fleetwide capacity factor of approximately 56% in 2022. Depending on the age and type of equipment of the plant, capacity factors among the CCGT fleet can vary. The newest CCGT plants (those that entered service between 2014 and the end of 2023 and are using the latest generation of natural gas turbines) recorded the highest average capacity factor in 2022, approximately 66%. CCGT plants that started operating between 1999 and 2013 with an earlier natural gas turbine model reported a slightly lower average capacity factor, about 57%, in 2022. Average capacity factors were lowest, about 36%, for the earliest group of CCGT plants, which began operating in the 1980s and up until 1998.
SCGT, ST, and ICE natural gas-fired generating facilities all had average capacity factors below 20% in 2022 because they usually are only called on to operate when power demand is at its highest or when intermittent renewable energy sources need backup. SCGT plants had an average capacity factor of approximately 13% in 2022, ST plants of about 16%, and ICE plants of 18%.
The efficiency of power plants is measured by a ratio of fuel consumed to output in kilowatthours, referred to as a heat rate. A low heat rate means that a facility is using less fuel to produce the same amount of electricity as other facilities with the same type of turbines. The most modern and efficient CCGT plants, those entering service sometime between 2014 and 2023, typically have heat rates less than 7,000 British thermal units per kilowatthour (Btu/kWh). Older facilities that opened between 1999 and 2013 average around 7,500 Btu/kWh. In contrast, SCGT and ST natural gas-fired plants typically have heat rates greater than 10,000 Btu/kWh, or at least one-third higher than a CCGT facility.
Heat rates are an important measure of fuel requirements by the natural gas-fired generating fleet. For example, the most modern CCGT plants generated approximately 16% of all electric power from natural gas-fired plants in 2022 while consuming only about 14% of total energy use. In contrast, the SCGT fleet consumed nearly the same amount of fuel as CCGTs in 2022 but accounted for about 9.0% of total natural gas-fired generation. Differences in heat rates, especially when natural gas prices are elevated, can greatly affect the economics of generation using natural gas.
Capacity factors and efficiency ratings are good predictors of which plant type may be added or retired from the natural gas-fired generating fleet. As the natural gas-fired power fleet becomes more efficient in the future, steam boiler plants and older SCGT facilities using natural gas will be retired, and more CCGT plants using the latest natural gas turbine technology will be added.
All 11 major electricity regions in the United States rely on natural gas to meet a significant share of their power load. Regions with the largest concentration of natural gas-fired power plants are in the eastern half of the United States, where natural gas production has increased alongside developing shale and tight resources. Natural gas production growth from the Marcellus shale region has boosted natural gas generation in PJM, the Midcontinent Independent System Operator (MISO), and parts of SERC. Natural gas-fired capacity in the Electric Reliability Council of Texas (ERCOT) also has been affected by increased natural gas production in that state.
Based on 2022 data from our Electric Power Annual, regions with the highest capacity factors for CCGT plants are in the eastern half of the United States. SERC, PJM, FRCC, and MISO all recorded capacity factors for their respective CCGT fleets at or greater than the national average of 56%. CCGT plants in the SERC and PJM regions, which are newer and more efficient on average, were operating more than 60% of the time during 2022. PJM and FRCC are home to some of the most modern and highest efficiency natural gas turbines in the United States.
In contrast, average capacity factors for CCGT plants in four regions—the Independent System Operator-New England (ISO-NE), SPP, the Southwest, and the California Independent System Operator (CAISO)—all were less than 50% during 2022. Capacity factors in ISO-NE and SPP were especially low at 41% in 2022, and in CAISO, they were about 47%. The lower percentages mostly were due to more generation from wind and solar sources in SPP and CAISO and constrained winter natural gas supply in ISO-NE.
Capacity factors for SCGT plants regionally were different than that for the CCGT fleet. The SCGT fleet in five regions (ERCOT, the New York Independent System Operator, ISO-NE, MISO, and the Northwest) had average capacity factors greater than the national average of 13% in 2022. Of special note, the SCGT fleet in ERCOT had an average capacity factor of approximately 27% in 2022. This extremely high rate was due to ERCOT's record-high demand for electricity during both the summer and winter, as well as intermittent operation from the region’s large wind turbine fleet.
Six regions that had lower peak demand on an hourly basis in 2022 relied less on SCGT output than the national average. These regions were SPP, CAISO, SERC, PJM, FRCC, and the Southwest.
Principal contributors: Mark Morey, Scott Jell
Perfluorocyclobutane Tags: natural gas, generation, electric generation, capacity factor, power plants, electricity