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Natural Gas Represents More than Half of Nation’s Total Generation Capacity Growth of 4,350 MW in 1H 2014; Coal Adds Zero Capacity

The U.S. Energy Information Administration reported yesterday that in the first half of 2014 solar plants added electric power generation capacity of 1,150 MW – 70% above the new solar capacity added in the first half of 2013.  Three-fourths of the new solar capacity is in California, but a 110 MW addition went to Arizona’s Agua Caliente plant, the world’s largest solar PV plant with 290 MW of total capacity. Other states adding solar capacity were Nevada and Massachusetts, the EIA reported in its Electricity Monthly Update.

solar1

Source: EIA

Additions to U.S.-based wind generation more than doubled additions in 2013, with a total capacity increase of 675 MW. Most of the new capacity was in California, Nebraska, Michigan and Minnesota, including 228 MW additions to California’s Alta Wind Energy Center, the largest U.S. wind farm, with total capacity of 1,548 MW.

Natural gas plants carried the bulk of the total electrical generation capacity additions with 2,180 MW in combined-cycle capacity additions, up 60% over 1H 2013. Florida has added more electric generation capacity (1,210 MW) than any other state so far in 2014, and all of it involves natural gas combined-cycle capacity. The balance of the gas additions were at plants in Utah and Texas.

The EIA reported that there were no additions to coal-fired generation capacity in January through June of 2014. “Apart from the Kemper IGCC plant in Mississippi, there are no other coal plants planned to come online in 2014.”

Power Plant Comparisons

The U.S.’s electricity generation plants vary widely in capacity and fuel used.

By way of comparison, Duke Energy’s (ticker: DUK) Buck Combined Cycle Power Station is a 620 MW natural gas-fired power generation plant in North Carolina that came online in 2011. The company’s Oconee power station is a 2,500 MW nuclear generation plant in South Carolina that came online in 1973.

“According to a 2008 Electric Power Research Institute study, a conventional combined-cycle natural gas plant costs about $1,000 per kilowatt of capacity constructed. A coal-fired plant costs more than $2,500 per KW hour to build. The cost of a new nuclear plant is more than $4,000 per KW of capacity. Wind generation costs are about double natural gas installation costs. A new solar plant in Florida is projected at about $6,600 per KW,” the American Natural Gas Association reported.

The EIA reports that Arizona’s Agua Caliente plant is the world’s largest solar photovoltaic plant, with 290 MW of total capacity. According to Power Technology, “The $1.8 billion solar project was originally initiated by NextLight Renewable Power, which was acquired by First Solar on July 12, 2010. In August 2011, NRG Energy acquired the project from First Solar. MidAmerican purchased a 49% stake in the project in January 2012. The solar farm generates enough electricity to serve around 225,000 average homes. Pacific Gas & Electric (PG&E) Company purchases the entire power generated by the plant under a 25 year power purchase agreement (PPA).

The 3,200 acre Alta Wind Energy Center in Kern County, California, also called the Mojave Wind Farm, is the second largest onshore wind energy project in the world and the largest wind project in the U.S., according to Power Technology. “It is owned by Terra-Gen Power, an affiliate of Arclight Capital Partners and Global Infrastructure Partners. The project will supply 1,550 MW of clean renewable energy to Southern California Edison (SCE) for more than 25 years under a 3,000 MW wind power development initiative upon completion.”

Levelizedgraph2

Source: Institute for Energy Research

The Institute for Energy Research provides an analysis of different generation systems on a levelized cost comparison basis, illustrated in the graph, with a detailed discussion of cost components in its analysis.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.