The Status of U.S. Combustion Turbine Generation with Comparisons to the European Market

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Since 1999, the U.S. Power industry has added over 150,000 megawatts of combined cycle and simple cycle combustion turbine generator (CTG) capacity (1,433 units total), boosting the total operating gas turbine fleet in the U.S. to over 4,200 units, totaling 248,000 megawatts. This construction boom, which peaked in 2002 with the addition of more than 44,000 megawatts and over 400 CTG's will most likely never be repeated in the same amount of time.

Click on the image at right to view the U.S. Operational Combution Turbines by Start-Up Year Chart.

Construction of new generation capacity in the future will be modest compared to recent years, to say the least. Over the past two years, 238,000 megawatts of CTG related capacity, representing 1,800 units at 600 sites have been placed on indefinite hold or cancelled as developers reevaluate capacity utilization, future growth, and demand.

Despite volatility in the of price and supply of natural gas, construction of combustion turbine generating plants will remain the most viable option to meet future energy demands. According to Britt Burt, Manager of the Power Industry Group for Industrialinfo.com, "In addition to facing fewer permitting obstacles, plants utilizing natural gas fired simple-cycle or combined-cycle technology are less expensive and have a shorter construction time than traditional fossil fuel-fired plants".

Merchant energy developers faced with lower wholesale power prices and poor credit ratings are moving forward only on projects that can obtain long-term power purchase agreements. Utilities, which are wary of notoriously volatile electricity markets are pulling back from the unregulated wholesale trade by expanding their own power plant portfolios to meet demand. Together, they are currently developing over 100,000 megawatts, representing 709 new CTG installations, scheduled for startup between mid 2004 and 2011. Of that total, more than 26,000 megawatts representing 216 new units are scheduled to begin operating by mid 2005. This includes 151 units representing 21,368 megawatts currently under construction, with the remaining units in the advanced stages of development.

Click on the image at right to view the U.S. Combustion Turbines Under Development by Projected Start-up Year Chart.

The construction spree has led to surplus generating capacity in many parts of the country causing a large number of older merchant owned combustion turbines to be rarely dispatched due to the newly added more efficient generating capacity they compete against. Because of this, in 2003, over 30 combustion turbine generators totaling 1,400 megawatts of generating capacity were retired, more than twice the amount of the previous year. Already 32 units totaling 630 megawatts have been scheduled for retirement by the end of 2004. This includes twelve GE Frame 5's, five Westinghouse Model W501's, four Model W251's, and eleven Pratt & Whitney FT4's.

Since 2000, more units, mostly greater than 30 years old, have been retired than the previous decade combined. "We expect this trend to grow considering that there are more than 1,000 combustion turbines totaling 27,000 megawatts in operation that are greater than 30 years of age," states Shane Mullins, Senior Product Manager Turbine Database for Industrialinfo.com.

European Comparisons

The North American market for combustion turbines is similar to the European market as the shift to clean power has put a premium on natural gas projects and has made natural gas the fuel of choice for future power generation projects on both continents. In fact, natural gas consumption in Europe has increased by 10% in the last five years. This can be attributed to increases in power plant consumption, because of improving gas prices and environmental benefits, when compared to other fuel choices. Since 1999, Industrialinfo.com has tracked approximately 233 European natural gas power plant projects, representing more than $61 billion in total investment value.

Several factors are leading to the increased usage of natural gas in Europe, including public demand for green energy sources, and in general, a leaning away from nuclear and coal-fired generation. For example, Germany has announced plans to close their 19 nuclear reactors by 2021, which generate 20,724 MW. Germany shutdown the first of the 19 plants, the Stade nuclear power plant, last November. Political changes could alter the direction of this trend in the future; however, this can do nothing but increase natural gas and renewable project development throughout the European Union.