EL&P exclusive: 2002 operating performance rankings reflect changes in market dynamics

Pam Boschee, Managing Editor

EL&P again collaborated with Energy Ventures Analysis (EVA), Arlington, Va., for this report. Tom Hewson, EVA principal, discussed the following generation sector snapshots in a recent interview.

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Nuclear plants’ capacity factors up slightly
Table 1 shows the rankings of nuclear plants by generation. Of the top 20 plants, 19 are the same as last year. Most changes in relative position on the list are attributable to differences in scheduling of planned outages. While no new nuclear plants are currently being built, considerable investment has been made to expand existing nuclear capacity and power output. Generation increased by 1.6 percent and capacity by 0.9 percent in 2002, allowing nuclear capacity factors to reach an industry record-setting average of 91.5 percent (see Table 2). These record-setting industry capacity factors have resulted from increased unit availability in part attributable to scheduling planned outages further apart.

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According to Hewson, this trend of increasing nuclear generation should continue as generators are investing capital to improve output and availability of units, and nuclear power remains incrementally inexpensive. There are now five pending applications at the Nuclear Regulatory Commission (NRC) for upgrading units (expanding existing capacity), and another 28 plants have expressed similar interest and are expected to file with NRC. NRC approved eight of such applications in the first 10 months of 2003. (Last year, NRC approved 18; in 2001, 22 were approved). In addition to these uprates, four utilities plan to restart or build new nuclear units. Three utilities have submitted applications to NRC for early site permits, which are required to build new capacity–Dominion Nuclear’s North Anna, System Energy Resources’ Grand Gulf, and Exelon Generating’s Clinton. TVA plans to restart Browns Ferry in 2008.

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These plans could be just “the tip of the iceberg” if stringent carbon dioxide (CO2) limits, are eventually adopted. New York Gov. George E. Pataki has asked the governors of 10 Northeastern states to join a regional initiative to reduce CO2 emissions from power plants. According to a recent EVA report, this initiative would trigger the need for the Northeast to add 11,800 MW of new nuclear capacity over the next 10 years and build an additional two nuclear plants every year thereafter ( to maintain the CO2 limits).

The only dark cloud over nuclear’s brighter future is the final resolution to the spent nuclear waste disposal issue and the emergence of corrosion and cracking problems, most likely related to coolant leaks, that have been identified in three pressurized water reactors–FirstEnergy’s Davis Besse, CenterPoint’s South Texas and Entergy’s Waterford Unit 3.

Coal plants see benefits from high natural gas prices

Many new plants were announced a few years ago, but few are actually being built. Saber-rattling and discussions continue, but only six new coal plants are now under active development (meaning approvals have been completed and financing is in place).

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Coal generation showed an increase between 2001 and 2002, but capacity continues to drop off somewhat as some smaller units are retired (units where investment for pollution controls will not be made).

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The top four units in Table 3 are the same, although rankings have changed somewhat. Last year, to be in the top 10, a plant needed to have generation above 15.8 million MWh. This year, the cutoff is 16.6 million MWh, which reflects the increase in utilization of coal units due to the increase in natural gas costs.

Six new plants are included in the list this year (Nos. 6, 8, 12, 14, 16, 20), all of which are located in the East. These plants benefited primarily from high natural gas prices and the Davis Bessie nuclear plant problems. Of the six plants that were dropped, three were in the West (most likely a result of the comeback of hydro supply in the Northwest).

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Hewson believes that a significant factor in future performance of coal plants will be the system effects from the expansion of the EPA seasonal NOx program and the addition of environmental controls for emissions, such as ozone (nitrogen oxides, NOx). Beginning next year, coal units in most eastern states will incur additional NOx penalties during the 5-month ozone season. Not only will the production costs increase but the required NOx controls could adversely affect the availability of units and lower net output from higher parasitic loads. Some Eastern units may have difficulty maintaining their generation output as environmental controls are added to meet tighter limitations.

Overall, coal generation in 2002 was at 70.6 percent capacity factor vs. 69.9 percent in 2001.

There was a slight increase in net capacity factor in part due to retirement of smaller units. Most listed plants in Table 4 are either Western units selling power into the high cost California or Denver markets or were cogeneration plants (“qualifying facilities”), which have nondispatchable contracts. Several high capacity factor plants are minemouth plants with low fuel costs.

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Table 5 ranks efficiency of coal-fired plants by heat rates. The goal of coal generators is to improve their plants’ energy efficiencies and lower production costs to improve dispatch.

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The heat rate cutoff point for inclusion on this list is about the same as last year. Coal technologies are a significant factor–supercritical boilers clearly have the advantage when it comes to being included on this list.

Also, the absence of post-combustion environmental controls also benefits energy efficiency because of lower parasitic loads.

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Plants new to the list this year include: 9 (Tampa Electric’s Polk), 11 (San Antonio Public Service Board’s JK Spruce), 12 (Southern Co.’s EC Gaston), 14 (AEP’s Mountaineer), 16 (South Carolina Public Service Authority’s Cross), 18 (SCANA Corp.’s Williams) and 19 (LG&E’s Roanoke Valley I).

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Polk is an integrated gasification combined cycle (IGCC) power plant that is part of DOE’s Clean Coal Technology demonstration program. At a heat rate of 9,411 Btu per kWh, the station has not yet reached the technology heat rate goal of 8,200 Btu per kWh. IGCC has the promise of becoming the most energy efficient coal technology.

IGCC converts coal into a combustible gas that can be used in a turbine and the hot exhaust gases used to generate steam to drive a steam turbine. Hewson said, “If it was able to achieve the technology efficiency goal, it would be No. 1. It went from No. 21 last year to No. 9 this year.”

The two prime factors determining this list in the future will be whether a plant uses supercritical technology and if it has post combustion environmental controls. As such controls are added to the plants now on the list, rankings may be shuffled, and the list may once again include other coal plants that already have existing environmental controls in place.

Table 6 ranks coal-fired plants by their 2002 SO2 emission rates. Six plants are new additions to the list: 12 (City of Marquette, Mich., Shiras), 15 (Foster Wheeler’s Mt. Carmel), 17 (AES Corp.’s Somerset Kintigh), 18 (Basic Electric Power Coop’s Laramie River), 19 (AEP’s Oklaunion) and 20 (Kansas City Power & Light’s Hawthorn). The highest ranking plant to drop from last year’s list was the Polk plant. It dropped from No. 10 to No. 21.

These SO2 rankings are dependent upon two factors: how well a plant’s scrubber works and the quality of the coal being used. The lower the sulfur content of the coal, the more likely it is that a plant will be included on this list.

The top three units are located in the West, where there is an abundant supply of low-sulfur coal. Dominion is the cleanest emitting coal unit in the East.

Factors that improve rankings include plant location in the West, being a newer plant, or if a plant is willing and able to spend more than $200 per kW on a scrubber. A plant must also be willing to incur the additional operational cost to achieve the higher removals.

Combined cycles kick it up a notch

Table 7 shows the rankings of combined cycle generation by plant. Eight of this year’s group are carryovers from last year. Last year, a plant needed to generate nearly 1.8 million MWh to be included on this list. This year, the cutoff is at nearly 3.8 million MWh. To illustrate the difference, consider that this year’s No. 20 would have ranked No. 7 last year.

Many of last year’s plants have dropped off the list because big capacity generators have come on board. In some cases, generators have been in operation for all of 2002 instead of for only a part of the year (which may have been the case when the rankings were determined last year).

Hewson said, “Combined cycle capacity increased by a whopping 47 percent compared to last year. Generation increased by 33 percent. As a result, the overall combined cycle capacity factor, which was 43.3 percent last year dropped to 39.1 percent this year. There’s a lot of surplus capacity out there.” (See Table 8)

Table 9 lists combined cycle heat rates (Btu per kWh) by plant. This year’s top reported heat rate was Duke Energy’s Maine Independence (551 MW) at 6,758 Btu per kWh.

Hewson noted that theoretically achievable heat rate efficiencies are based on ideal operating conditions, including operation at full load with standard temperature and pressure. However, real-world conditions such as operating at higher ambient temp-erature, higher elevations, or high natural gas prices and/or surplus capacity, result in less than optimal operating conditions and much lower capacity factors.

“In many planning studies, we have seen mistakes made as a result of over-estimating unit efficiency. Heat rate efficiencies as low as 6,500 to 7,000 Btu per kWh have been assumed in several studies. Investment decisions have been made with overly optimistic assumptions that have led to over-estimating profitability and worth of plant.”

A significant factor for the combined cycle heat rate rankings in 2002 was technology and capacity factor.

He added, “Last year to be in the top 20, a plant needed a heat rate of better than 7,800 Btu per kWh. This year, the cutoff is 7,150, so there’s no doubt that the new technologies are more efficient. This year’s No. 20 would have been No. 6 last year. We’re getting a lot of new people on the block using the more energy efficient equipment, and that’s why the list is so very different than the year before.”

Table 10 lists combined cycle NOx rates (lb per MMBtu) by plant. “Last year, to be in the top 20, a plant’s NOx rate had to be less than 0.03. That just doesn’t cut it this year where the cutoff is 0.0110. The bottom line is that combined cycle plants are become more efficient and cleaner,” said Hewson.

For more information about Energy Ventures Analysis, visit www.evainc.com or call 703-276-8900.


Quick reference to tables

Table 1. Top 20 nuclear power plants ranked by generation
Table 2. Top 20 nuclear power plants ranked by capacity factor
Table 3. Top 20 coal-fired power plants ranked by generation
Table 4. Top 20 highest utilized coal-fired power plants ranked by capacity factor
Table 5. Top 20 most energy efficient coal-fired power plants ranked by heat rate efficiency
Table 6. Top 20 cleanest coal-fired plants based upon SO2 emission rates
Table 7. Combined cycle generation by plant
Table 8. Combined cycle capacity factors
Table 9. Combined cycle heat rate by plant
Table 10. Combined cycle NOx rate by plant


Sources:
1. Generation: F906 Utility and Nonutility
2. Emissions: EPA 2001 CEMS Data
3. Capacity: EVA CCGT database, Inventory of Power Plants (Various years, 2001 FERC Form 1)
4. List of CCs: EVA CCGT Database for newer than 1998, Pre 1998 EVA Fuelcast 2002: Short Term Overview Exhibit B-9

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