Natural Gas-Fired Capital Projects Still Shine in Great Lakes Region During Age of Renewables

Researched by Industrial Info Resources (Sugar Land, Texas)--A few years ago, natural gas-fired power represented a substantial amount of new power plant construction in the U.S., but with the rise in renewables, the fuel's dominance of the construction spotlight in the U.S. has begun to wane. Even the proportion of natural gas being fired in existing plants is in decline as older plants are retired and natural gas prices in the U.S. are on the rise. In the U.S. Energy Information Administration's (EIA) latest Summer Electricity Outlook, which provides details about U.S. electricity consumption in June, July and August, the agency forecasts that natural gas consumption this summer will represent 37% of total generation, compared with 42% last summer.

In 2016, natural gas surpassed coal to become the leading generation source, and while it still holds this position, coal is once again gaining ground, displacing some natural gas. Part of the reason for this is that natural gas prices are expected to be higher this summer, averaging $3.13 per million British thermal units, which would be 46% higher than last summer. Coal is expected to rise from a generation share of 22% last summer to 26% this summer.

While natural gas remains the dominant fuel source in the U.S., as the prices of renewables such as solar and wind decline, they are gaining ascendency in the power generation sector. In the upcoming third quarter, wind and solar combined account for $13.3 billion in planned capital power starts, while capital natural gas projects account for slightly less than $3 billion, and this includes dismantlement and demolition projects.

With about $1 billion in planned projects, the Great Lakes market region, which includes Illinois, Indiana, Kentucky, Michigan, Ohio and Wisconsin, leads the rest of the U.S. in the value of third-quarter natural gas-fired project kickoffs.

Click on the image at right for a breakdown by market region of planned natural gas-fired capital power project starts in the third quarter.

In the Great Lakes region, the largest project on the books is EmberClear Corporation's (Houston, Texas) Harrison Power project in Cadiz, Ohio, about 50 miles from Pittsburgh, Pennsylvania. However, some doubt remains whether this project will see the light of day as it has been delayed and seen some slippage in the originally proposed kickoff date. Nevertheless, it's still on EmberClear's radar, with the company's website saying the 1,050-megawatt (MW) plant is planned to begin commercial operations in early 2024. The project is planned for an ideal location, and would receive fuel through a 2 billion-cubic-foot-per-day gas production and gathering operation less than a mile away, in the Utica Shale. EmberClear also says it is considering a hydrogen production facility at the plant. If you subscribe to Industrial Info's Global Market Intelligence (GMI) Power Database, click here to view the project report.

Thanks to a large project in Connecticut, New England takes second position in overall project spending. After being delayed due to COVID-19, NTE Energy (St. Augustine, Florida) is set to kick off the Killingly Energy Center project this summer. The one-on-one combined-cycle unit will generate 650 MW. Gemma Power Systems LLC (Glastonbury, Connecticut) will provide engineering, procurement and construction services. For more information, see Industrial Info's project report.

Several smaller projects also are planned to take place. Among these is the Kissimmee Utility Authority's (Kissimmee, Florida) uprate of Unit 3 at the Cane Island facility in Intercession City, Florida. The uprate will boost the unit's generating capacity by 10 MW to 171 MW by installing new combustion system hardware and advanced gas path components, a redesigned turbine shell, a rotor removal and revamp, and new and upgraded control system components. The project is expected to be completed in early 2022. For more information, see Industrial Info's project report.

On a different path, Industrial Info is tracking three dismantlement/demolition projects for older, less efficient natural gas-fired units, including two in Minnesota belonging to Xcel Energy Incorporated (NASDAQ:XEL) (Minneapolis, Minnesota) subsidiary Northern States Power Company. Four 18-MW General Electric (NYSE:GE) (Boston, Massachusetts) heavy-frame combustion turbines will be removed from the Granite City power in Saint Cloud, Minnesota, as well as at the Key City power station in Mankato, Minnesota. For more information, see Industrial Info's project reports on the Granite City and Key City projects.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.