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Because of its many economic and environmental benefits, natural gas has become the fuel of choice for electricity generation. In the 1990s, there was a dramatic shift to natural gas for the generation of electricity. Large coal and nuclear generating plants were the clear choice of electric utility planners in the 1970s and 1980s, but a combination of economic, environmental and technological factors have resulted in a pronounced movement to gas. In fact, virtually all new generating capacity being added today will rely on gas.
Gas-fired combined-cycle technology is the overwhelming choice in these new generating plants. Combined-cycle plants offer extremely high efficiency, clean operation, low capital costs and shorter construction lead times. The efficiency of combined-cycle units is now approaching 60 percent compared with roughly 34 percent efficiency for traditional boiler units — regardless of the fuel source.
Higher efficiency means lower fuel bills and less pollution. For example, replacing a coal generating unit with a gas-fired combined-cycle plant could eliminate sulfur dioxide emissions (the primary cause of acid rain), cut carbon dioxide (the principal greenhouse gas) by as much as two-thirds and cut nitrogen oxides (the primary cause of smog) by as much as 95 percent. Also, not only is the lead time for construction of a combined-cycle unit shorter than that of a new coal-fired plant, but construction can be implemented in a modular fashion. So rather than constructing one large coal or nuclear unit today and hoping that the forecasted demand for electricity will be realized, smaller gas units can be constructed as warranted-without the economic penalties associated with building "small" coal or nuclear plants.
Gas consumption by central-station electricity generating plants will more than double over the next 20 years although the increase may be lower than projected by some forecasters. Gas consumption at central-station electricity generating plants (including electric utility plants and independent power producers) is currently at 3.3 quads per year. The
accelerated projection indicates consumption will more than double by 2020-to 6.7 quads per year. Although this growth is far above historic levels for this sector, the total is somewhat less than the current projection of 7.8 quads and significantly less than the 9.2 quads forecast by the U.S. Energy Information Administration in its 1999 Annual Energy Outlook.
While the accelerated projection includes a very high penetration rate for gas in new generating facilities, capacity additions are somewhat limited. These limitations are due to the assumed life extensions of both nuclear and coal plants, increasing the use of coal and nuclear plants, growth in distributed generation and some construction of new coal plants in the later years of the forecast.
By 2020, the operating licenses of half of all nuclear generating plants will expire, but not all of these plants will be closed. About 100 gigawatts of nuclear generating capacity are operating in the United States today, providing 20 percent of the country's electricity. The operating licenses of many of these plants will expire over the next 15 to 20 years. In fact, if no operating licenses are extended, nuclear generating capacity would be cut in half by 2020. However, as a result of industry restructuring, significant consolidation is occurring within the nuclear industry. This consolidation, combined with environmental pressures to reduce greenhouse gas emissions, will likely result in efforts to renew the licenses of many nuclear plants. The accelerated case includes an assumption that two-thirds of the nuclear units scheduled to retire will be granted license extensions.
The role of coal will stay fairly constant, and it will remain the nation's primary source of electricity. Currently, coal provides 56 percent of the electricity generated in the United States, and this percentage remains essentially constant throughout the forecast period for the accelerated scenario. Since electricity consumption will continue to increase and the coal share is stable, coal consumption is forecast to actually increase from the 900 million ton level today to 1.1 billion tons by 2020.
Growth in renewable energy will be robust but not a panacea. Renewable energy such as wind and solar power accounts for approximately 12 percent of the electricity generated today, increasing to nearly 15 percent by 2020 in the accelerated projection. At first glance, this growth appears somewhat modest. However, it must be considered that the lion's share of the renewable mix today is attributable to hydroelectric generation. No new hydro capacity is anticipated in the forecast period due to concerns related to fish habitat. Thus, the non-hydro renewable growth is impressive-more than doubling over the next 20 years
Electricity generation will begin to shift from central-station facilities to distributed-generation facilities. In the accelerated projection, 20 percent of the new generating capacity added throughout the forecast period is accounted for by distributed generation, providing about 5 percent of all electricity generated in 2020. It should be noted that over the past decade cogeneration, a form of distributed generation that produces both electricity and useful heat, accounted for 25 to 30 percent of the total generating capacity added. (See "Gas Puts Electricity on the Doorstep" for more details about distributed generation.)
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Gas Puts Electricity on the Doorstep
"Distributed generation" refers to the placement of small-scale power-generation units at or near the site where the electricity will be used. These units can generate as little as 5 kilowatts of electricity, which is enough for the average single-family home, and 50 kilowatts or more for factories. In fact, on-site natural gas generation is very popular at industrial facilities.
Natural gas is a particularly attractive fuel for distributed generation, and it powers most of the numerous distributed generation technologies. The systems available today range from fuel cells that generate electricity for individual homes to gas-fueled turbines and reciprocating engines that produce electricity for a factory.
Compared with electricity generation at central-station power plants, distributed electricity generation produces fewer pollutants, is more energy-efficient and more reliable. For instance, distributed generation eliminates the loss of electricity, roughly 8 percent, that occurs when electricity moves from the central-station power plant through the power line grid to the point of use.
Gas-fueled distributed generation also is resistant to power outages, produces high-quality electricity required for very high-tech applications and gives the consumer greater control over energy use.
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