## CRS Report for Congress

Prepared for Members and Committees of Congress 

# Displacing Coal with Generation from Existing Natural Gas-Fired Power Plants
Stan Mark Kaplan Specialist in Energy and Environmental Policy January 19, 2010

Congressional Research Service 7-5700 www.crs.gov R41027Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

Congressional Research Service 

# Summary
Reducing carbon dioxide emissions from coal plants is a focus of many proposals for cutting greenhouse gas emissions. One option is to replace some co al power with natural gas generation, a relatively low carbon source of electricity, by incre asing the power output from currently underutilized natural gas plants. This report provides an overview of the issues involve d in displacing coal-fired generation with electricity from existing natural gas plants. This is a complex subject and the report does not seek to provide definitive answers. The report aims to highlightthe key issues that Congress may want to consider in deciding whether to rely on, and enco urage, displacement of coal-fired electricity with power from existing natural gas plants. The report finds that the potential for displacing coal by making greater use of existing gas-fired power plants depends on numerous factors. These inc lude:

• The amount of excess natural gas-fired generating capacit y available.

• The current operating patterns of coal and gas plants, and the amount of flexibility power system operators have for changing tho se patterns.

• Whether or not the transmission grid can deliver pow er from existing gas power plants to loads currently served by coal plants.

• Whether there is sufficient natural gas supply, and pipeline and gas storage capacity, to deliver large amounts of additional fue l to gas-fired power plants. There is also the question of the cost of a coal displa cement by gas policy, and the impacts of such a policy on the economy, regions, and states. All of these factors have a time dimension. For example, while existing natural gas power plants may have sufficient excess capacity today to displa ce a material amount of coal generation, this could change in the future as load grows. Therefore a full analysis of the potential for gas displacement of coal must take into account future co nditions, not just a snapshot of the current situation. As a step toward addressing these questions, Congre ss may consider chartering a rigorous study of the potential for displacing coal with power from ex isting gas-fired power plants. Such a study would require sophisticated computer modeling to simul ate the operation of the power system to determine whether there is sufficient excess gas fir ed capacity, and the supporting transmission and other infrastructure, to displace a material volume of coal over the near term. Such a study could help Congress judge whether there is sufficie nt potential to further explore a policy of replacing coal generation with increased output from existing gas-fired plants.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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# Contents

Introduction ..........................................

................................................... ...................................1 Purpose and Organization...............................

................................................... ....................1 Issues Not Considered in the Report....................

................................................... ...............2 Background on Gas-Fired Generation and Capacity...........

................................................... .......3 Capacity Trends .....................................

................................................... ............................3 Factors Supporting the Boom in Gas-Fired Plant Construction ............................................ ..4 Technology .........................................

................................................... .........................4 Natural Gas Prices .................................

................................................... ......................5 Carbon Dioxide Emissions .............................

................................................... ..............6 Electric Power Industry Restructuring and Overbuilding ....... ..........................................6 Coal Displacement Feasibility Issues................

................................................... ........................9 Estimates of Displaceable Coal-Fired Generation and Em issions...........................................9 Transmission System Factors .........................

................................................... ..................10 Isolation of the Interconnections.......................

................................................... ..........12 Limited Long-Distance Transmission Capacity.........

................................................... ..12 Transmission System Congestion .........................

................................................... ......13 Power Plant Proximity Analysis ......................

................................................... ...........14 System Dispatch Factors ............................

................................................... ......................18 Natural Gas Supply and Price.......................

................................................... ....................19 Natural Gas Transportation and Storage...............

................................................... .............22 Policy Considerations .................................

................................................... ...........................23 

## Figures Figure 1. Net Change in Generating Capacity by Energy Source, 1990 to 2007............................3 Figure 2. Shares of Total Generating Capacity by Energy Source, 1989 and 2007 ........................4 Figure 3. Henry Hub Cash Spot Price for Natural Gas ...

................................................... ...........6 Figure 4. Location of Large Coal-Fired Power Plants in th e Conterminous States ...................... 11 Figure 5. Location of Large NGCC Power Plants in the Con terminous States ............................ 11 Figure 6. United States Power System Interconnections.

................................................... .........12 Figure 7. Coal Plants with Hypothetical Generation Displ aced by a NGCC Plant Within 10 Miles.............................................

................................................... .................................16 Figure 8. Coal Plants with Hypothetical Generation Displaced by a NGCC Plant Within 25 Miles.............................................

................................................... .................................16 Figure 9. Monthly Capacity Factors in 2007 for Study Group Coal and NGCC Plants................18 Figure 10. Hourly Coal and Combined Cycle Generation at Pla nt Barry ....................................19 Figure A-1. Elements of the Electric Power System......

................................................... ..........25 Figure A-2. Illustrative Daily Load Curve ................

................................................... ..............27 Figure B-1. Schematic of a Combined Cycle Power Plant.....

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## Tables Table 1. Growth in Generating Capacity, 1990 - 2007

................................................... ...............7 Table 2. Utilization of Study Group NGCC Plants, 2007.....

................................................... ......8 Table 3. Approximation of the Maximum Displaceable Coal-Fired Generation, Based on 2007 Data ..............................................

................................................... ...............................9 Table 4. Approximation of Maximum Displaceable CO 2 

### Emitted by Coal-Fired Generators, Based on 2007 Data.....................

................................................... .......................9 Table 5. Hypothetical Estimates of the Displacement of Coal Generation and Emissions by Existing NGCC Plants Based on Proximity .............

................................................... .......17 Table 6. Illustrative Estimates of Increased NaturalGas Demand For Coal Displacement Compared to Total National Demand....................

................................................... ...............20 Table 7. Illustrative Estimates of Increased NaturalGas Demand Relative to Electric Power Demand, Based on 2007 Data...................

................................................... ................23 

## Appendixes Appendix A. Background on the Electric Power System.........

................................................... 25 Appendix B. Combined Cycle Technology ................

................................................... .............29



## Contacts
Author Contact Information ............................

................................................... .......................30Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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# Introduction Purpose and Organization Coal-fired power plants currently account for about 80 % of CO 2 

### emissions from the U.S. electric power industry and about 33% of all U.S. CO 2 

### emissions. 1 

### Accordingly, reducing CO 2 

### emissions from coal plants is a focus of many proposals for cutting greenhouse gas emissions. Options include capturing and sequestering the CO 2 

### emitted by coal plants, and/or replacing coal-fired generation with low- and zero-carbon sources of elec tric power, such as wind or nuclear power. Another option is to replace coal power with increase d use of natural gas generation. Natural gas is not a zero-carbon fuel, but gas-fired power usin g modern generating technology releases less than half of the CO 2 

### per megawatt-hour (MWh) as a coal plant. Recent la rge increases in estimates of natural gas reserves and resources, especi ally from shale formations, have further fed interest in natural gas as a relatively low carbon energy option. One proposal is that the nation can and should achieve ne ar-term reductions in carbon emissions by making more use of existing natural gas plants. This argument was made at an October 2009 Senate Energy and Natural Resources Committee hearing on The Role of Natural Gas in Mitigating Climate Change . An executive for a large natural gas pipeline company s tated that “Just as natural gas plays a key role in meeting U. S. energy demands, it can also play a key role in providing meaningful, immediate , and verifiable [CO 2 

### ] emission reductions.” 2 

### [emphasis added] The witness for Calpine, a large operator of gas- fired power plants, stated that: I am here today to tell you that we could, today, simply through the increased use of existing natural-gas fired power plants, meaningfully reduce the CO 2 emissions of the power sector, immediately and for the foreseeable future. In other words, a near- and medium-term solution to our climate change challenge is at hand. No guesswork. No huge spending programs needed. That power would be reliable—available all day, every day. And if we embrace this solution with the right incentives, Am erican business would continue to invest its own capital in existing proven technologies to build even more natural gas fired plants to dramatically further reduce emissions for the longer ter m. [emphasis added] 3 

### Both of these statements emphasize the claimed immediatecarbon reductions that can result from increased use of natural gas. This would be accomplishe d by squeezing more electricity from existing gas-fired power plants, so that coal-fired p lants can be operated less and CO 2 

### emissions quickly and substantially reduced.

1 Energy Information Administration (EIA), Annual Energy Review 2008 , Tables 12.1 and 12.7b, http://www.eia.doe.gov/emeu/aer/envir.html. 2 Written testimony of Dennis McConaghy, Executive Vice Pre sident, TransCanada Pipelines, Ltd., before the Senate Energy and Natural Resources Committee hearing on The Role of Natural Gas in Mitigating Climate Change , October 28, 2009, p. 6, http://energy.senate.gov/public/index.cfm?Fuse Action=Hearings.Hearing&Hearing_ID=788a1684- b2a2-f5bb-f574-81b9257ba5aa. 3 Written testimony of Jack Fusco, President and CEO, Calpine Corp., before the Senate Energy and Natural Resourc es Committee hearing on The Role of Natural Gas in Mitigating Climate Change , October 28, 2009, p. 1, http://energy.senate.gov/public/index.cfm?FuseAction=Heari ngs.Hearing&Hearing_ID=788a1684-b2a2-f5bb-f574- 81b9257ba5aa.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### This report provides an overview of the issues involve d in displacing coal-fired generation with electricity from existing natural gas plants. This is a complex subject and the report does not seek to provide definitive answers. The report aims to highlightthe key issues that Congress may consider in deciding whether to rely on, and encourage, displ acement of coal-fired electricity with power from existing natural gas plants. The balance of the report is organized as follows:

• Background on gas-fired generation and capacity.

• Coal displacement feasibility issues.

• Policy considerations. The report also includes two appendices. Appendix A , Background on the Electric Power System, may be of particular value to readers relativ ely new to the subject. Appendix B provides information on the gas-burning combined cycle generati ng technology discussed in the report. 

## Issues Not Considered in the Report Several topics are beyond the scope of this report:

• What would be the cost of a policy of displacing co al with natural gas? The cost would depend on a host of uncertain variables, such as future natural gas and coal prices, any need to build additional pipeline and tr ansmission line facilities, and the cost of carbon (if any).

• Could natural gas be burned on a large scale in exis ting coal plants? Assessing this option would require engineering analysis of the plan ts and determining how many coal plants have access to high capacity natur al gas pipelines.

• How will circumstances change over time? For example, while existing natural gas plants may have enough excess capacity today to dis place a material amount of coal generation, this could change in the future as load g rows.

• What kind of existing natural gas plants could be us ed to displace coal? This report focuses on the potential for displacing coal generation with increased use of underutilized “combined cycle” generating plants, the most modern and efficient type of natural gas-fired power plants. Two other types of gas-fired plants have low utilization rates: peaking plants ( stand-alone combustion turbines and diesel generators) and old steam-electric natural g as plants. These are not reviewed in the report because they are relatively ineff icient and may not be designed or permitted for baseload operation. Addressing these issues would require computer model ing and engineering analysis beyond the scope of this report. As noted in the concluding se ction of the report, these issues, if of interest t o Congress, could be part of a more comprehensive revi ew of the potential for displacing coal with natural gas.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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# Background on Gas-Fired Generation and Capacity
The argument for displacing coal with natural gas res ts on the fact that the United States has a large base of advanced technology, underutilized, gas- burning power plants. This section of the report describes how this reservoir of underutilized naturalgas combined cycle (NGCC) plants came about, and why it may represent an option for reduc ing the use of coal plants. 

## Capacity Trends From the 1990s into this century, gas-fired power p lants have constituted the vast majority of new generating capacity built in the United States. Thi s development is illustrated by Figure 1 for the period 1990 to 2007. Minimal new coal capacity was constructed and the growth in nuclear capacity was limited to uprates to existing plants. Only wind capacity has challenged the preeminence of natural gas as the source of new generat ing capacity, and then only in the latter part of the 2000s when total capacity additions declined sharply. Figure 1. Net Change in Generating Capacity by Energ y Source, 1990 to 2007 Net Summer Capacity

-10,000,000

0 10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 70,000,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 200 2 2003 2004 2005 2006 2007Kilowatts of Generating Capacity Natural Gas
Coal
Nuclear Hydroelectric
Wind
All Other

Source: Calculated from data in EIA, Annual Energy Review 2008 , Table 8.11a, http://www.eia.doe.gov/emeu/aer/ elect.html. Notes: Capacity can decrease when retirements and deratings of units exceed capacity additions and increases. Also, in some cases the primary fuel of a unit may change, such as from wood to coal. The net change is calculated as the year over year change for each type of capacity. 

### As shown in Figure 2 , this building boom doubled the natural gas share of total generating capacity between 1989 and 2007. Natural gas-fired capacity is now the largest component of the national generating fleet.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### Figure 2. Shares of Total Generating Capacity by Ene rgy Source, 1989 and 2007 Shares of Total Net Summer Capacity

19% 39% 42% 31% 14% 10% 10% 8% 15% 11%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

1989 2007% of Total Generating Capacity

All Other Hydroelectric Nuclear Coal Natural Gas

Source: Calculated from data in EIA, Annual Energy Review 2008 , Table 8.11a, http://www.eia.doe.gov/emeu/aer/ elect.html. 

### Although natural gas is the largest source of genera ting capacity, it trails far behind coal as a source of actual electricity generation. 4 

### In 2008, coal accounted for 49% of all electricity produced, compared to 21% for natural gas, 20% for nuc lear power, and 6% for hydroelectric generation. 5 

### The remainder of this section will explain why so m uch new gas-fired generation was built and why it is underutilized. 

## Factors Supporting the Boom in Gas-Fired Plant Construct ion Natural gas was the major source of new capacity in the 1990s and early 2000s in part by default. Nuclear and coal power have been burdened with cost, environmental, and (in the case of nuclear power) safety concerns. Oil-fired generation was es sentially ruled out by the costs and supply risks of petroleum supplies. This left natural gas as the energy source for new non-renewable power plants. But in addition to the negatives that s urrounded alternatives, gas fired capacity also grew because of favorable technological, cost, envi ronmental, and power market characteristics. 

### Technology The new gas-fired plants constructed in the 1990s an d subsequently were built around the latest design of combustion turbines—a specialized form of the same kind of technology used in a jet engine, but mounted on the ground and used to rotate a generator. Stand-alone combustion turbines were built to serve as peaking units that wo uld operate only a few hundred hours a year. However, the most important technological developme nt was the application of combustion

4“Capacity” is a measure of the potential instantane ous electricity output from a power plant, usually me asured in megawatts or kilowatts. “Generation” is the actual amount of electricity produced by the plant over a pe riod of time, usually measured in megawatt-hours or kilowatt-hours. For a dditional information see Appendix A

. 5 These four sources accounted for 96% of electricity production in 2008, which is the typical combined sh are going back to the 1980s. All other sources, such as wind, pe troleum, and biomass, account for the remaining 4%.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### turbines in modern natural gas combined cycle power pla nts. (For additional information see Appendix B .) These plants were often intended to serve as basel oad generators which would operate 70% or more of the time. The NGCC has three imp ortant characteristics:

• The technology is very efficient , because it makes maximum use of the energy in the fuel through a two-step generating process th at captures waste heat that would otherwise be lost. 6



### • NGCC plants can be built relatively quickly and cheaply . An NGCC plant costs roughly $1,200 per kilowatt of capacity, abouthalf as much as for a coalfired plant, and can be built in about two to three years from ground-breaking to operation. This compares to about to five to six years to build a coal plant. Coal plants also tend to have longer pre-construction pla nning and permitting phases. 7



### • Combined cycle technology is suitable for relatively s mall scale and modular construction. NGCC plants can be economically built at unit sizes of about 100 MW, and larger projects can be constructed by adding units in a building block fashion over time. Coal plants in contrast are generally economical only at a unit size of several hundred megawatts. For the reasons discussed below, these characteristi cs made the NGCC an attractive technology option for the independent power producers that domi nated the construction of new power plants in the 1990s and after.


### Natural Gas Prices The construction of new gas-fired capacity was also enco uraged by relatively low natural gas prices in the 1990s. As illustrated by Figure 3 , the spot price for natural gas hovered around $2.00 to $3.00 per MMBtu (nominal dollars) through the decade, and a widely held expectation was that gas prices would remain low into the future

. 8

6 By extracting the maximum energy from fuel combustion, modern combined cycles can reportedly achieve heat ra tes in the range of 6,752 to 6,333 btus per kwh. This co mpares to 9,200 to 8,740 btus per kwh for steam ele ctric coal technology. (EIA, Assumptions to the Annual Energy Outlook 2009 , Table 8.2, http://www.eia.doe.gov/oiaf/aeo/ assumption/index.html.) This efficiency advantage can make c ombined cycles very economical to operate. 7 For more information on power plant cost and construc tion issues, see CRS Report RL34746, Power Plants: Characteristics and Costs , by Stan Mark Kaplan. 8 Rebecca Smith, “Utilities Question Natural-Gas Forec asting,” The Wall Street Journal , December 27, 2004.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### Figure 3. Henry Hub Cash Spot Price for Natural Gas November 1993 to December 2009, Nominal Dollars

$- $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00

No v-9 3 No v-9 4 Nov -9 5 Nov - 9 6 N o v-9 7 No v-9 8 No v-9 9 Nov - 0 0 Nov-0 1 N o v-0 2 No v-0 3 Nov -0 4 Nov - 0 5 Nov-0 6 No v-0 7 No v-0 8 Nov -0 9$ per MMBtu

Henry Hub Cash Spot Price Source: U.S. Federal Reserve Bank of St. Louis FRED database ( http://research.stlouisfed.org/fred2/series/ GASPRICE?cid=98). 

### Carbon Dioxide Emissions The operation of NGCC plants, and natural gas plants generally, produce fewer harmful environmental impacts than coal-fired plants, and have be en much easier to site and permit than coal plants. NGCC technology has fewer air emission s than coal plants in part because of the nature of the fuel, and in part because of the grea ter efficiency of the technology. For example, natural gas when burned inherently emits about half as much carbon dioxide as coal. 9 

### However, because combined cycle plants are more efficient tha n typical existing coal plants in converting fuel into electricity, the difference in emissions is greater when measured in terms of CO 2 

### released per megawatt-hour of electricity produced. By this measure a modern combined cycle emits only about 40% of the CO 2 

### per MWh as a typical existing coal plant. 10 

### Electric Power Industry Restructuring and Overbuilding Restructuring of the electric power industry (beginning in the late 1970s and accelerating in the 1990s) included federal and state policies that enco uraged the separation of power generation and

9 Natural gas emits 117.08 pounds CO 2 per MMBtu burned. The comparable numbers for subbitum inous, bituminous, and lignite coal are, respectively, 212.7, 205.3, and 215.4 pounds of CO 2 per MMBtu burned. EIA, Electric Power Annual 2007, Table A3, http://www.eia.doe.gov/cneaf/electricity/epa/epa_sum.html. 10Other environmental advantages of combined cycle plants i nclude minimal or zero emissions of sulfur dioxides and mercury; no solid wastes, such as ash and scrubber slu dge; no coal piles with attendant fugitive dust and ru noff problems; and the fuel is delivered by pipeline rather t han railroad or truck. A combustion turbine burning natural gas will emit more nitrogen oxides (NOx) per MMBtu of fuel c onsumed than a coal-fired boiler, and depending on the location of a gas-fired plant it may have to install a low NOx combustion system and a selective catalytic reduction system to capture NOx emissions.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### power plant construction from other utility function s. In the 1990s, new independent power producers (IPPs) bought power plants from utilities and constructed most of the new generating capacity. Because these companies sold power into comp etitive markets and did not have the security of regulated rates and guaranteed markets, they ge nerally sought to minimize risks by constructing relatively low cost, quick-to-build, pow er plants. For these reasons, independent power producers buil t many NGCC plants, largely to meet baseload demand. As shown in Table 1 , between 1990 and 2007 over 168,000 MW of NGCC capacity was built at 345 plant sites. This was an enormous building program, equivalent to adding 23% to the entire national generating fleet that existed in 1990. However, the growth in generating capacity did not stop with new combined c ycle plants. As also shown in Table 1 , another 89,843 MW of less efficient stand-alone pea king turbines were constructed, plus another 56,939 MW of other generating technologies. When all of this capacity is added together, generating capacity grew by 43% between 1990 and 20 07.

Table 1. Growth in Generating Capacity, 1990 - 2007

Natural Gas Combined Cycle (NGCC) Stand-Alone

Combustion Turbine (Natural Gas) All Other Fuel Sources and Technologies Total Additions to Generating Capacity, 1990 – 2007 (MW) 168,259 89,843 56,939 315,041

Additions as a Percent of Total 1990 Generating Capacity (734,100 MW) 23% 12% 8% 43%

Source: Calculated from the EIA-860 data file for 2007, http://www.e ia.doe.gov/cneaf/electricity/page/ eia860.html. Notes: The capacity shown is net summer capacity. The All Other ca tegory contains 2,184 MW of gas-fired capacity, primarily in new internal combustion engines and s team turbines, and 5,432 MW of combined cycle and stand-alone combustion turbine capacity burning fuels other than natural gas (primarily stand-alone combustion turbines using distillate fuel oil). 

### By the mid-2000s it was apparent that the combined cyc le building boom had resulted in excess and underutilized generating capacity. Too many plan ts were built, in part because of questionable investment decisions by independent developers oper ating in an immature restructured power market. The capacity glut was compounded by a drama tic increase in gas prices after 2000. (See Figure 3 .) Even the high efficiency of the combined cycle plants cou ld not compensate for gas prices that at times peaked above $10.00 per MMBtu, compared to $2.00 to $3.00 per MMBtu prices (nominal dollars) in the 1990s. The consequence of the combined cycle building boom and bust is that the fleet of NGCC plants has a large amount of unused generating capacity, a s illustrated in Table 2 for a “study group” of large combined cycle plants defined for this report. 11 

### Baseload operation can be reasonably

11 The study group of combined cycle plants consists of plants with the following characteristics: minimum ne t summer (continued...)Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### defined as operation at an annual capacity factor of 70% or greater. As shown in Table 2 , only 13% of combined cycle capacity in the study group op erated in this range in 2007. A third of the combined cycle capacity had a utilization rate of less than 30%; that is, the plants were the equivalent of idle more than 70% of the time.

Table 2. Utilization of Study Group NGCC Plants, 20 07 Capacity Factor Category Net Summer

Megawatts Percent of Total

NGCC Megawatts Number of NGCC Plants Percent of Total

NGCC Plants 70% and Greater 22,151 13% 42 13% Under 70% to 50% 40,103 24% 68 22% Under 50% to 30% 50,711 30% 90 29% Under 30% 57,662 34% 114 36% Total 170,627 100% 314 100%
Source: Calculated from the EIA-860 and EIA-906/920 databases for 2007 (http://www.eia.doe.gov/cneaf/ electricity/page/data.html). Notes: Detail many not add to total due to rounding. For informat ion on the characteristics of the power plants selected for the study group, see footnote 11. 

### In 2007 the study group of NGCC plants had an averag e capacity factor of 42%. 12 

### In contrast, the study group of coal plants had an average capacity fa ctor of 75%. 13 

### It is this mismatch between combined cycle and coal plant operating patterns—the fo rmer, low carbon emitting but underutilized; the latter, high carbon emitting and h ighly utilized—that creates the interest and perceived opportunity for displacing coal power wit h gas generation from existing plants.

(...continued) capacity of 100 MW; the plant operated at some point in time during 2007 and was in operational conditio n at the end of 2007; the plant’s primary fuel was natural gas; and the plant’s primary purpose was to sell power to the public. (This last criterion excludes industrial and commercial cogenera tors who operate a power plant primarily to provide electricity and steam to a single business establis hment.) A total of 314 combined cycle plants with tota l capacity of 170,627 MW met these criteria. The study group of coal plants had the same criteria except that the capacity floor was 250 MW and the primary fuel had to be coal or waste c oal. A total of 298 coal plants with total capacity of 284,646 MW met these criteria. CRS identified the plants and e xtracted the data from the EIA-860 and EIA-906/920 da tabases for 2007 (http://www.eia.doe.gov/cneaf/electricity/page/ data.html). The 2007 generation from the plants in the combined cycle study group (630.4 million MWh) account ed for 98% of all gas-fired combined cycle generatio n in the electric power sector in 2007. Similarly, the genera tion from the coal plants in the study group (1,870.6 mil lion MWh) accounted for 95% of all coal-fired generation in t he electric power sector. 12 Capacity factor is a measure of the actual utilizat ion of a power plant compared to its hypothetical maximum utilization. For additional information see Appendix A

. 13 For information on the study group of coal plants seefootnote 11. Capacity factors were calculated usingthe EIA906/920 generation and EIA-860 generating capacity databases (http://www.eia.doe.gov/cneaf/electricity/page / data.html).Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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# Coal Displacement Feasibility Issues Estimates of Displaceable Coal-Fired Generation and Emissio ns The maximum coal-fired generation and emissions that may be displaceable by existing NGCC plants is estimated in Table 3 and Table 4 . As noted above, the plants in the NGCC study grou p had an average capacity factor of 42% in 2007. As sho wn in the tables, if the utilization of this capacity could be essentially doubled to 85%, it wo uld generate additional power equivalent to 32% of all coal-fired generation in 2007, and could displace about 19% of the CO 2 

### emissions associated with coal-fired generation of electricit y. Table 3. Approximation of the Maximum Displaceable C oal-Fired Generation, Based on 2007 Data (1) (2) (3) (4) (5)

Actual NGCC Generation, 2007 (MWh) Hypothetical NGCC

Generation at an 85% Capacity Factor (MWh) Hypothetical Surplus

Generation Available for Coal Displacement (MWh) (2) – (1) Actual Coal-Fired

Generation in 2007 (MWh) Hypothetical Surplus

NGCC Generation as a Percentage of Coal Generation (3) / (4) 630,358,373 1,270,487,153 640,128,780 2,016,456,000 32%
Source: CRS estimates based on EIA-906/920 and EIA-860 electri c power databases, and EIA, Electric Power Annual 2007 , Table ES1, http://www.eia.doe.gov/cneaf/electricity/epa /epa_sum.html. Notes: The generation in column 1 is for the 314 NGCC plants i ncluded in the study group defined for this report. For additional information see footnote 11. As discussed in the main body of the report, several factors, such as transmission system limitations, will tend to d rive actual displacement below the maximum potential. Also, this estimate is for 2007, and in other years the amountof surplus gas generation and the amount of coal generation will likely vary from 2007 values. 

### Table 4. Approximation of Maximum Displaceable CO 2 

### Emitted by Coal-Fired Generators, Based on 2007 Data (1) (2) (3) (4) (5) (6)

Estimated Hypothetical Coal Generation Displaced by Natural Gas (MWh) Estimated CO 2

Emissions from Displaced Coal Generation (Million Metric Tons) Estimated CO 2

Emissions From NGCC Generation Used to Displace Coal (Million Metric Tons) Net Reduction in

Emissions of CO 2 by Natural Gas Displacement of Coal (Million Metric Tons) (2) – (3) Total CO 2

Emissions from Coal for Power Generation, 2007 (Million Metric Tons) Hypothetical

Net Reduction in CO 2Emissions as a Percentage of 2007 Total Electric Power Coal Emissions of CO 2 (4) / (5) 640,128,780 a 635.7 b 253.6 c 382.1 2,002.4 19%
Source: CRS estimates based on: EIA-906/920 database (http://www.eia. doe.gov/cneaf/electricity/page/ eia906_920.html); EIA, Electric Power Annual 2007 , Table A3, http://www.eia.doe.gov/cneaf/electricity/epa / epa_sum.html; EIA, Annual Energy Review 2008 , Table 12.7a, http://www.eia.doe.gov/emeu/aer/envir.html.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

Congressional Research Service 10 Notes: As discussed in the main body of the report, several fac tors, such as transmission system limitations, will tend to drive actual displacement below the maximum pot ential. Also, this estimate is for 2007, and in other years the amount of surplus gas generation and the amount of coal generation will likely vary from 2007 values. a. From Table 3, column 3. b. In 2007, total coal generation was 2,016,456,000 MW h (Table 3, column 4) and total CO 2 emissions from coal were 2,002.35 million metric tons. This equates to 0. 993 metric tons of CO 2per MWh of coal generation (the comparable value for a modern NGCC plant is about 0.4 me tric tons of CO 2per MWh). Therefore, the estimated CO 2emissions from the displaced coal is 640,128,780 MWh x 0.993005 metric tons of CO 2per MWh = 635.651 million metric tons of CO 2 . c. Actual study group NGCC generation in 2007 was 630 ,358 MWh (Table 3, column 1). This generation consumed 4,702,226,931 MMBtus of natural gas, or 7.4 596 MMBtus of gas per MWh. At this average heat rat e, it would take 4,775,104,647 MMBtus of gas to displace 640,128,780 MW h of coal generation. This much gas burn would release 253.6 million metric tons of CO 2 , using an emissions factor of 117.08 pounds of CO 2per MMBtu of natural gas consumed and 2,204.6 pounds per m etric ton.


### Although these calculations suggest that at most abo ut a third of current (2007) coal-fired generation could be displaced by existing NGCC plan ts, it is unlikely that this maximum could actually be achieved. This section of the report wi ll discuss issues that relate to the feasibility of actually displacing coal with gas from existing power pla nts. The issues are:

• Transmission system factors;

• System dispatch factors;

• Natural gas supply and price; and

• Natural gas transportation and storage. 

## Transmission System Factors If an NGCC generating unit is located at the same p lant site as a coal-fired generating unit, it is probably fair to assume that the NGCC unit can use the same transmission lines as the coal unit and can transmit its power to any load the coal uni t is used to meet. However, in most cases coal units and NGCC units are built at separate locations and rely on different transmission paths to move their power. This means that there is no guaran tee that the NGCC plant can send its power to the same loads as the coal plant and by doing so displace coal-fired generation. Even on a regional level, coal and NGCC plants are not ne cessarily located in the same areas. The maps in Figure 4 and Figure 5 show, respectively, the location of large coal and NGCC plants in the conterminous states. The maps show that i n some cases coal and NGCC plants are in the same regions, such as east Texas. On the ot her hand, California has many NGCC plants and no coal plants, while the Ohio River valley has a d ense concentration of coal plants and only a handful of NGCC plants. This section of the report will discuss three types of transmission system constraints that can prevent one power plant from meeting the load current ly served by another plant. These limits on the “transmission interchangeability” of coal and NGCC plants are:

• Isolation of the Interconnections;

• Limited long-distance transmission capacity; and

• Transmission system congestion.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### The concluding part of this section presents an analys is of potential coal displacement by gas using the proximity of coal and existing NGCC plants as a proxy for transmission interchangeability. Figure 4. Location of Large Coal-Fired Power Plants in the Conterminous States 250 Megawatt and Greater Net Summer Capacity

Source: Platts Powermap (fourth quarter 2009 database). 

### Figure 5. Location of Large NGCC Power Plants in the Conterminous States

100 Megawatt and Greater Net Summer Capacity

Source: Platts Powermap (fourth quarter 2009 database).Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### Isolation of the Interconnections The electric power grid covering the conterminous st ates is divided into three “interconnections,” Eastern, Western, and the ERCOT Interconnection that covers most of Texas ( Figure 6 ). These three interconnections operate in most respects as independent systems. There are only a handful of limited, low capacity links between the interconn ections. Consequently, surplus capacity in one interconnection cannot be used to meet load in another interconnection.

Figure 6. United States Power System Interconnection s

Source: adapted from a map located on the Energy Information Adm inistration website at http://www.eia.doe.gov/cneaf/electricity/page/fact_sheet s/transmission.html.
Notes: ERCOT = Electric Reliability Council of Texas. 

### To illustrate with a hypothetical example, assume 1,000 MW of surplus NGCC capacity in the northern part of the ERCOT Interconnection, and a desired use for that capacity to displace coal in Oklahoma, which is in the Eastern Interconnection. Altho ugh the regions are adjacent, from the standpoint of the power grid they are electrically i solated from each other because, with very limited exceptions, the ERCOT and Eastern Interconnection s are not linked. Therefore the displacement cannot take place. 

### Limited Long-Distance Transmission Capacity Within each interconnection the network of power lin es, generating plants, and electricity consumers are linked together. The grid operates in some respects like a single giant machine in which, for example, a disturbance in the operation of the transmission system in Maine is detectible by system monitors in Florida. Although all generators and loads within an interco nnection are linked by the grid, the power grid is not designed to move large amounts of power long distances. The grid was not built inDisplacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### accordance with a “master plan,” analogous to the Inter state Highway System. Transmission lines were first built in the early 20 th 

### century by single utilities to move electricity topopulation centers from nearby power plants. As generation and transmission technology advanced, the distances between power plants and loads increased, but the model of a single entity building lines within its service territory to supply its ow n load still predominated. Over time the local grids began to interconnect, due to utilities building jointly owned power plants and because power companies began to grasp the economic and reliability benefits of being able to exchange power. Nonetheless, this pattern of development did not emphasize the construction of very long-distance inter-regional lin es. Consequently, the capacity to move power long distances within interconnections is limited. For exa mple, while a generator in Maine and a load in Florida are connected by the grid, it is no t feasible to send power from Maine to Florida because the transmission lines do not have enough c apacity to move the electricity. Additionally, over distances of hundreds of miles, losses occur with transmission of electricity, making the transfer uneconomic. 14 

### Power can be moved long distances most efficiently by the highest voltage transmission lines, but only a small porti on of the national grid consists of these types of lines. 15 

### Much of the debate over the proposed increased us e of renewable power involves how to build and pay for the new transmissio n lines that would be needed to move wind and solar power from remote locations to population centers, in part to displace fossil-fueled power plants. Coal displacement by existing gas-fi red generators is a similar type of problem. If the existing transmission network does not have suff icient capacity in the right places, then it may not be practical to move gas-powered electricity to lo ads currently served by coal plants without investing in upgraded or new power lines. 

### Transmission System Congestion Even across relatively short distances, options formoving power can be restricted by transmission line congestion. Transmission congestion occurs when use of a power line is limited to prevent overloading that can lead to failure of the line. Congestion can occur throughout a power system:

• Regional congestion: for example, power flows are li mited between the eastern and western parts of the PJM power pool (covering m uch of the Midwest and

14Line loss is the loss of electrical energy due to the re sistance of the length of wire in a circuit. Much of the l oss is thermal in nature. (This definition is a composite creat ed from the glossaries at http://www.eia.doe.gov/glos sary/ glossary_l.htm and http://www.ewh.ieee.org/sb/srisairam ec/glossary/k-lglos.htm.) 15 Most of the transmission grid uses alternating current (AC) technology which is prone to line losses. By using transmission lines with higher kilovolt (kV) ratings, mo re power can be transported long distances with fewer los ses. The highest capacity AC lines currently in use in the U nited States have a rating of 765 kV, but according to DOE these lines make up less than 2% of the grid. An alternative, direct current (DC) technology, can move large amounts of power long distances with minimal losses. However, D C lines are in only limited use (about 2% of the grid) because they are more difficult and expensive to integrate into the grid than AC lines. Proposals have been made to upgra de the AC network by building more 765 kV lines and lines u sing even high capacity AC technology (referred to as ultra high voltage transmission), and to build more DC lines. Theseproposals are generally focused on moving renewable powe r long distances. For example, see American Electric Power, Interstate Transmission Vision for Wind Integration , undated, http://www.aep.com/about/i765project/docs/WindTransm issionVisionWhitePaper.pdf, and the Joint Coordinated System Plan proposal at http://www.jcspstudy.or g/. (The transmission line statistics cited in this foot note are from DOE, National Transmission Grid Study , May 2002, p. 3, http://www.ferc.gov/industries/electric/indus-act/ transmission-grid.pdf.)Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### middle Atlantic regions) by congestion. 16 

### In the western states, examples of congested links include power flows between Montana a nd the Pacific Northwest, and between Utah and Nevada. 17



### • State-level congestion: for example, congestion restricts power flows into and out of southwestern Connecticut. 18



### • Local congestion: These are “load pockets” with limi ted ability to import power. New York City is an example of a load pocket. Transmission congestion can increase costs to consumer s by forcing utilities to depend on nearby inefficient power plants to meet load instead of imp orting power from more distant but less costly units. Studies suggest that the annual costs of tran smission congestion range from the hundreds of millions to billions of dollars. 19 

### However, for the purposes of this report the key a spect of transmission system congestion is not the cost impa ct, but the restrictions it imposes on power flows. Because of congestion, it may not be possib le to ship power from an underutilized NGCC plant to a load served by coal power, because the trans mission path available to the combined cycle is too congested to carry the electricity. The solution for congestion is not necessarily massi ve transmission construction. For example, DOE found that in the Eastern Interconnection “a relativel y small portion of constrained transmission capacity causes the bulk of the conges tion cost that is passed through to consumers. This means that a relatively small number of select ive additions to transmission capacity could lead to major economic benefits for many consumers.” 20 

### However, in the absence of this construction, congestion remains a constraint on the choice of power plants available to meet a load. 

### Power Plant Proximity Analysis Transmission system limitations on coal displacemen t can be rigorously analyzed using sophisticated computer models. Such an analysis is b eyond the scope of this report. However, a first approach to the significance of transmission factors can be made by examining how close coal plants are to existing NGCC plants. The assumpti on behind such a “proximity analysis” is that the closer an NGCC plant is to a coal plant, the more likely that the NGCC plant will connect to the same transmission lines as the coal plant. If the NGCC plant has this comparable transmission access—that is, the combined cycle is “tra nsmission interchangeable” with the coal plant—it potentially could serve the same load as the coal plant and supplant the coal generation.

16 Ventyx Corp., Major Transmission Constraints in PJM, 2007, http://www1.ventyx.com/pdf/wp07-transmissionconstraints.pdf. 17 Western Electric Coordinating Council, 2008 Annual Report of the Transmission Expansion Planning Policy Committee, Executive Summary , March 31, 2009, p.9, http://www.wecc.biz/committees/BO D/TEPPC/ Shared%20Documents/TEPPC%20Annual%20Reports/2008/Cov erLetter_Exec_Summary_Final_.pdf. 18 Connecticut General Assembly, Office of Legislative Re search, Factors Behind Connecticut’s High Electric Rates , August 5, 2008, No. 2008-R-0452, http://www.cga.ct.gov/2008/rpt/2008-R -0452.htm. 19 Bernard Lesieutre and Joseph Eto, Electricity Transmission Congestion Costs: A Review of Recent Reports , Lawrence Berkeley National Laboratory, p. 2, http://c erts.lbl.gov/pdf/54049.pdf, and U.S. Department of Energy, National Transmission Grid Study , May 2002, pp. 16–18, http://www.pi.energy.gov/documents/Transmi ssionGrid.pdf. 20U.S. DOE, National Electric Transmission Congestion Study , August 2008, p. 28, http://www.pi.energy.gov/ documents/TransmissionGrid.pdf. Emphasis in the original no t shown.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### CRS performed a proximity analysis for the coal plan ts and NGCC plants in the study groups defined for this report. The analysis was conducted as follows, in all cases using 2007 data (the most recent pre-recession year for which complete data were available): (1) Study groups of large coal plants and NGCC plants w ere defined. The plants in these groups accounted for the great majority of power pl ant coal generation and NGCC generation in 2007. 21 

### (2) The latitude and longitude of each plant (provided by EIA) was entered into a geographical information system (GIS). (3) The GIS was used to identify all coal plants with one or more existing NGCC plants within a ten mile radius. The hypothetical surplus generation for each NGCC plant within the ten-mile radius was calculated and assume d to displace generation from the coal plant. 22 

### If one NGCC plant was within ten miles of two or mo re coal plants, it was allocated first to the coal plant with the la rgest estimated CO 2 

### emissions in 2007. 23 

### (4) A second version of Step 3 was performed which in cluded all NGCC plants within 25 miles of a coal plant. The maps in Figure 7 and Figure 8 show the locations of the coal plants assumed to h ave generation displaced by existing NGCC plants. 24

21 The study group of combined cycle plants includes 314 l arger plants that accounted for 98% of combined cycle generation in the electric power sector in 2007. The s tudy group of coal plants includes 298 larger plants th at accounted for 95% of coal-fired generation in the electric power s ector in 2007. For additional information on the characteris tics of the study groups see footnote 11. 22 Actual generation in 2007 is from the EIA-906/920 data base. Capacity factors were computed using this gener ation data and each plant’s capacity as reported in the E IA-860 database. An NGCC plant was assumed to have surp lus generation if its annual capacity factor in 2007 was less than 85%; that is, the hypothetical surplus genera tion available to displace coal was the difference between the NGCC pla nt’s actual generation in 2007 and the electricity it coul d have produced at an 85% utilization rate. A few NGC C plants had capacity factors of 85% or greater in 2007 and were therefore assumed to have no surplus generation available f or coal displacement. The EIA databases are available at http://www.eia.doe.gov/cneaf/electricity/page/data.html

. 23 CO 2 emissions were estimated for each coal plant based on the type and volume of coal consumed. Fuel consumption in MMBtus was taken from the EIA-906/920 database and used to calculate CO 2 emissions using the emission factors in EIA, Electric Power Annual 2007, Table A3, http://www.eia.doe.gov/cneaf/electricity/ep a/epa_sum.html. The same data sources were used to calculate CO 2 emissions for combined cycles. 24The maps only show coal plants assumed to have had gene ration displaced, and the existing NGCC plants responsible for the displacement. If a coal plant had an NGCC plant with the ten or 25 mile radius, but t he NGCC plant was assumed to be unavailable to displace coal (for exa mple, because it had a capacity factor in 2007 of 85% o r higher) no coal is assumed to have been displaced and the coa l plant is not shown on the map.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### Figure 7. Coal Plants with Hypothetical Generation D isplaced by a NGCC Plant Within 10 Miles

Source: CRS estimates, mapped using the Platts Powermap system. Notes: The maps only show coal plants assumed to have had generat ion displaced. If a coal plant has an NGCC plant with the ten mile radius, but the NGCC plant was assumed to be unavailable to displace coal (for examp le, because it had a capacity factor in 2007 of 85% or higher) the coal plant is not shown on the map. 

### Figure 8. Coal Plants with Hypothetical Generation Displaced by a NGCC Plant Within 25 Miles

Source: CRS estimates, mapped using the Platts Powermap system. Notes: The maps only show coal plants assumed to have had generat ion displaced. If a coal plant has an NGCC plant with the 25 mile radius, but the NGCC plant was assumed to be unavailable to displace coal (for exampl e, because it had a capacity factor in 2007 of 85% or higher) the coal plant is not shown on the map.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### This analysis is not a forecast. It is a first appro ach to estimating coal displacement potential based on one factor, the proximity of coal and existing NG CC plants. Many other factors, including, for example, how utility systems are disp atched, the configuration and capacity of the electric power transmission system, fuel cost and ava ilability, natural gas transportation capacity, and power system reliability requirements, would in fluence actual coal displacement potential. These other factors could increase or decrease the pot ential displacement. Table 5 , which gives the results of the proximity analysis, shows in column 4 that existing NGCC plants located near coal plants might be able to ac hieve 15% to 28% of the potential maximum coal generation and CO 2 

### emissions displacement. However, the displaceablecoal generation and emissions (see Table 3 and Table 4 ) are only a fraction of total U.S. coal generation and CO 2 

### . As shown in Table 5 , column 5, the hypothetical displaced coal generati on and emissions are equivalent to 5% to 9% of total U.S. coal generation, and 3% to 5% of the associate d CO 2 

### emissions. Given its limitations, the analysis suggests that ex isting NGCC plants near coal plants may be able to account for something on the order of 30% or less o f the displaceable coal-fired generation and CO 2 

### emissions. Greater displacement of coal by existi ng NGCC plants would depend on more distant NGCC plants which would be less clearly “transmission interchangeable” with coal plants. This emphasizes the importance that the configuration and capacity of the transmission system will likely play in determining the actual potential for displacing coal with power from existing NGCC plants. Table 5. Hypothetical Estimates of the Displacement o f Coal Generation and

Emissions by Existing NGCC Plants Based on Proximit y Based on 2007 Data

Case (1) Category

(2) Amount

Displaced (3) Amount Displaced

as a % of the Maximum Potential Displacement of Coal by Existing NGCC Plants a (4) Amount

Displaced as a % of Total Electric Power Sector Coal MWh and Associated CO2 Emissions Error! Reference source not found. (5) Generation 101.8 Million MWh 16% 5% Generation and CO 2Displaced for Coal Plants within 10 Miles of a NGCC Plant Error! Reference source not found. CO 2Emissions 58.1 Million Metric Tons 15% 3%

Generation 181.5 Million MWh 28% 9% Generation and CO 2Displaced for Coal Plants within 25 Miles of a NGCC Plant Error! Reference source not found. CO 2Emissions 104.8 Million Metric Tons 27% 5%

Source: CRS estimates primarily based on EIA data. See the ma in text of the report for more information. For detailed backup, such as lists of plants, contact the author.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

Congressional Research Service 18 Notes: This is not a forecast; it is a rough approximation of coal displacement potential based on one factor, the proximity of coal and existing NGCC plants. Many o ther factors, including, for example, how utility s ystems are dispatched, the configuration and capacity of the electric power transmission system, fuel cost and availability, natural gas transportation capacity, and power system re liability requirements, would influence actual coal displacement potential. These other factors could increa se or decrease the potential displacement. MWh = Megawatt-hours; NGCC = natural gas combined cycle. a. The values in this column are calculated using column 3; Table 3, column 3; and Table 4, column 4. b. The values in this column are calculated using column 3; Table 3, column 4; and Table 4, column 5. c. The study group included 298 coal-fired plants. In the ten-mile radius case, coal is displaced in whole or part at 35 of these plants (11.7% of the plants). In the 25-mile radius case, coal is displaced in whole or part at 60 of these plants (20.1%). 

## System Dispatch Factors System dispatch refers to the pattern in which power plants are turned on and off, and their power output ramped up and down, to meet changing load patterns. (For additional discussion, see Appendix A .) The concept of displacing coal generation with p ower from existing NGCC plants assumes that the NGCC plants are underutilized or idl e when coal plants are operating. However, this is not necessarily the case. This can be illus trated by examining the monthly utilization of the coal and gas-fired plants in the study groups ( Figure 9 ). As shown in the figure, the utilization of coal and combined cycle plants follows a similar pattern: utilization is highest in the summer and, to a lesser degree, in the winter, and lowest in th e “shoulder” months of the spring and fall. The figure illustrates that when coal plant operation is at its highest and the most coal power can be displaced, NGCC plant operation is also at its highest and surplus gas-fired generation is therefore at its lowest. Figure 9. Monthly Capacity Factors in 2007 for Study Group Coal and NGCC Plants

35% 38% 33% 36% 37% 47% 53% 63%

50% 42% 35% 38% 77% 70% 66% 69% 79% 81% 83% 77% 71% 73% 76%

79%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DECCapacity Factor

Combined Cycle Gas Plants Coal-Fired Plants
Source: Calculated by CRS from the EIA-906/920 and EIA-860 da tabases. Notes: For information on the study groups of coal and NGCC plants , see footnote 11. NGCC= natural gas combined cycle.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### Figure 9 is a national, monthly picture of power plant dispatch. System dispatch actually takes place moment-to-moment, and at this level of detail the complexities in displacing coal with gas become further evident. Figure 10 graphically illustrates hourly dispatch at Plant Barry, a power plant in Alabama that has both coal and NGCC units at the same site. The data is for November 2007, the month in which the NGCC units at Plant Ba rry had their lowest generation for the year and therefore, in principle, the most excess capacity available to displace coal. 25 

### However, the graphic illustrates that even during this low utilizat ion month for the NGCC units, there are still periods when the units were running near maximum out put26 

### (e.g., November 6 to 9, and 27 to 30). While there were periods when coal plant output was high and the NGCC units were shut down (e.g., November 4), creating the maximum opportunity to displace coal with gas, there were also periods when the NGCC units were available but pote ntial coal displacement was reduced by limited operation of the coal units (e.g., November 18). These examples illustrate the level of detailed analysis required to realistically estimat e the potential for changing plant dispatch to displace coal with natural gas. Figure 10. Hourly Coal and Combined Cycle Generation at Plant Barry

November 2007

- 200 400 600 800 1,000 1,200 1,400 1,600 1,800

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Day of the MonthGross Hourly Mw Output Hourly Coal Unit Generation

Hourly NGCC Generation

Source: Data downloaded from the EPA website at http://camddataa ndmaps.epa.gov/gdm/index.cfm?fuseaction= emissions.prepackaged_select. 

## Natural Gas Supply and Price Large scale displacement of coal-fired generation by ex isting NGCC plants could result in a significant increase in U.S. gas demand. Table 6 compares the actual demand for natural gas for all purposes in 2007 with an illustrative estimate o f the additional gas supplies needed if all of the

25 According to U.S. EPA data, the gross output of the NGCC units at Plant Barry was 288,726 MWh in November 2007. In comparison, the highest output was 532,040 MWh i n August. The data was downloaded from the EPA websit e at http://camddataandmaps.epa.gov/gdm/index.cfm?fuseaction=em issions.prepackaged_select. 26 The NGCC units at Plant Barry have, according to the Pla tts Powermap database, a nominal total net winter cap acity of 1,090 MW. However, the maximum output achievable at any point in time will vary with the ambient air temperature, which affects the density of the air f low into the combustion turbine units of a NGCC.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### displaceable coal-fired generation (see Table 3 ) were actually replaced by existing NGCC plants. As discussed above, this maximum displacement of co al by existing NGCC plants may be unachievable, so results are also shown for a half and a quarter of the maximum.

Table 6. Illustrative Estimates of Increased Natura l Gas Demand For Coal

Displacement Compared to Total National Demand

Based on 2007 Data Hypothetical Maximum Displacement of Coal by Existing NGCC Plants (2007 data and 85% capacity factor) Half of

Hypothetical Maximum Displacement One Quarter of Hypothetical Maximum Displacement 1. Additional MWh of NGCC Generation Needed to Displace Coal 640,128,780 320,064,390 160,032,195
2. Required Additional Natural Gas in Trillion Btus (Tbtus) 4,775 2,388 1,194
3. Additional Gas as a Percentage of 2007 Gas Consumed for All Purposes in the U.S. a 20% 10% 5%

Source: Table 3 and EIA, Annual Energy Review 2008 , Tables 6.1 and A4 (http://www.eia.doe.gov/emeu/aer/ contents.html). Notes: Total gas consumption in 2007 of 23,047 billion cubic feet was c onverted to TBtus using a conversion factor of 1.028 (see Table A4 in the Annual Energy Review , cited immediately above). The MWh of additional gas

fired generation was converted to TBtus using a heat rate o f 7.4596 MMBtus of fuel input per MWh. This is the 2007 average annual heat rate for the study group of 3 14 combined cycle plants, calculated using the generatio n and fuel input reported in the EIA 906/920 database (http://www.ei a.doe.gov/cneaf/electricity/page/ eia906_920.html). a. Total gas consumption in 2007 for all residential, com mercial, industrial, electric power, and transportatio n purposes was 23,692 Tbtus. The percentages shown in Line 3 are calculated by dividing this number into t he values shown on line 2. 

### Total U.S. natural gas demand in 2007 was the third highest on record. The illustrative estimates of increased gas demand for coal displacement would increase the already high level of demand in 2007 by another 5% to 20% ( Table 6 , line 3). This increased demand might be met with a combinatio n of increased domestic production, pipeline imports from Canada, Alaskan supplies if the t rans-Alaskan gas pipeline is built, and imports of liquefied natural gas by tanker from over seas. For example, one reason for the interest in coal displacement by gas is the recent increase in n atural gas available from shale formations and other “unconventional” sources of gas. 27 

### The combination of higher production (up a projected 3.7% for 2009) and reduced demand due to the 2008-2009 recession has contributed to a sharp decline in gas prices from the peaks experie nced earlier in the 2000s (see Figure 3 ). 28 

### For

27 For additional information see CRS Report R40894, Unconventional Gas Shales: Development, Technology, a nd Policy Issues , coordinated by Anthony Andrews; and FERC, State of the Markets Report 2008 , August 2009, Section 2, http://www.ferc.gov/market-oversight/st-mkt-ovr/2008-so m-final.pdf. 28 EIA, Short-Term Energy Outlook , December 2009, pp. 4 – 6, http://www.eia.doe.gov/emeu/ste o/pub/dec09.pdf.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### the longer term, there is widespread optimism concer ning the gas supply and price outlook. An example is a late 2009 assessment by the Federal Energy Regulatory Commission (FERC): The long-term [gas production] story is one of abundance. In June, the Potential Gas Committee, an independent group that develops biennial as sessments of gas resources, raised its estimate to over 2 quadrillion cubic feet, one-thir d more than its previous level and almost 100 years of gas production at current consumption levels. Th e large increase is almost entirely due to improvements in our ability to harvest gas from shale and get it to markets at a reasonable cost.... As we have indicated before, gas pr oduction is becoming more like mining and manufacturing with high probability of production fr om each well drilled. This environment should have profound effects on the traditiona l boom and bust cycle of gas production. 29 

### EIA’s most recent long-term forecasts of natural ga s wellhead prices for 2020 and 2030 have dropped, respectively, 13% and 11% from its prior forecas t, “due to a more rapid ramping up of shale gas production, particularly after 2015. [The forecast] assumes a larger resource base for natural gas, based on a reevaluation of shale gas and ot her resources....” 30 

### Even with the current optimism concerning natural gas supplies and prices, it is important to note that natural gas markets have historically been excep tionally difficult to forecast. According to an EIA self-assessment of its long-term projections, “The fuel with the largest difference between the projections and actual data has generally been natural gas.” 31 

### In the 1990s gas prices were expected to be low; by 2004 prices were much higherthan expected and major gas buyers were reported to be “increasingly critical of the nation ’s system for forecasting natural gas supply and demand.” 32 

### Subsequently, as shown in Figure 3 , prices plummeted. In the October 2009 Senate hearing on natural gas, a cautionary note was sounded by the witness for Dow Chemical Company: Although increased supply from shale gas appears to ha ve changed the production profile, we have seen similar scenarios occur after past spike s. In 1998, significant new imports from Canada came on line; in 2002-2003, there were new supplies fr om the Gulf of Mexico and in 2005, new discoveries in the Rockies were brought into play. In each case, the initial hopes were too high and production increases were not as large as initially expected. 33 In 2009, as in 2002, 2004 and 2006, drilling has declined dramatical ly as price has fallen. After each trough, natural gas demand and price riseonce the economy turns, signaling the production community to increase drilling. During the lag between the pricing signals and new production, only one mechanism exists to rebalance supply and demand: demand

29 FERC, Winter 2009/2010 Energy Market Assessment , November 19, 2009, p. 3, http://www.ferc.gov/EventCalendar/ Files/20091119102759-A-3-final.pdf. For additional information on the findings of the Potential Gas Commi ttee, see the press release at http://www.energyindepth.org/wp-content/uploads/2009/03/potential-gas-committee-reportsunprecedented-increase-in.pdf. 30EIA, Annual Energy Outlook 2010 Early Release Overview , pp. 3, 4, 12, http://www.eia.doe.gov/oiaf/aeo/pdf/ overview.pdf. 31 EIA, Annual Energy Outlook Retrospective Review: Evaluati on of Projections in Past Editions (1982-2008) , September 2008, p. 2, http://www.eia.doe.gov/oiaf/analysispaper/retrospective/pdf/0640%282008%29.pdf. 32 Rebecca Smith, “Utilities Question Natural-Gas Forec asting,” The Wall Street Journal , December 27, 2004. 33 Statement for the Record of Edward Stones, Director of Risk Management, Dow Chemical Co., before the Senat e Energy and Natural Resources Committee hearing on The Role of Natural Gas in Mitigating Climate Change , October 28, 2009, p. 4, http://energy.senate.gov/public/_files/Stones Testimony102809.pdf.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

Congressional Research Service 22 destruction brought about by price spikes. Demand destruction is an antiseptic economic term for job destruction. 34 

### Although multiple options may exist to meet the additiona l natural gas demand created by a coal displacement policy, the significance of the potent ial increase in demand should not be underestimated. The lowest level of increased gas d emand shown in Table 6 , 1,194 trillion Btus (TBtus), would raise total demand to 24,886 TBtus. In its most recent Reference Case forecast, the U.S. Energy Information Administration (EIA) doe s not envision this demand level being reached until after 2028. The middle estimate of i ncreased gas demand shown in Table 6 would raise total gas demand to 26,080 TBtus, which is la rger than EIA’s forecast for 2035. 35 

### A policy of rapid change from coal to gas could therefore in volve a significant acceleration of gas demand growth compared to EIA’s current estimates. 

## Natural Gas Transportation and Storage Gas-fired power plants and other gas consumers receive fuel through a vast national pipeline network. At the end of 2008 the network consisted of 293,000 miles of interstate and intrastate pipelines with the capacity to move up to 215 billi on cubic feet (BCF) of gas daily. 36 

### The capacity of this system is sized to meet peak loads , such as during the winter residential heating season. Peak demands are also supported by a syste m of natural gas storage facilities connected to the pipeline network. These storage facilities ho ld gas which is produced during lower demand periods until it is needed to meet peak demand. It seems unlikely that on a national, aggregate scale , pipeline capacity would be a constraint on coal displacement by existing NGCC plants. The natural gas consumption required for the maximum potential coal displacement by existing NGCC p lants (see Table 3 ) equate to about 15 BCF per day of natural gas, or about 7% of existing pip eline capacity. 37 

### A 7% increase in peak demand would appear manageable given the planned expansions to the pipeline system (see below). But irrespective of national system-wide cap acity, a different question is whether increased use of gas-fired plants could overstress the specific pipelines and storage facilities that serve those plants. This may be an important issue b ecause the increase in gas demand from existing NGCC plants for coal displacement could be large relative to the amount of gas currently used for power generation. As shown in Table 7 , illustrative estimates of this increase range from 16% to 66%, which means that the facilities serving those plants could have to handle a material increase in gas demand.

34Ibid., p. 3. 35 EIA’s Annual Energy Outlook 2010 backup spreadsheet f or Table 13, located at http://www.eia.doe.gov/oiaf/ aeo/ aeoref_tab.html. Values were converted from cubic feet to Btus using a conversion factor of 1.028. This is the Reference Case forecast, which assumes no changes to curre nt law or regulations. 36 The interstate portion of the system consists of 217, 000 miles of pipeline with a capacity of 183 BCF per day. The interstate portion consists of 76,000 miles of pipeline w ith a capacity of 32 BCF per day. EIA, Expansion of the U.S. Natural Gas Pipeline Network: Additions in 2008 and Pro jects through 2011 , September 2009, p. 3, http://www.eia.doe.gov/pub/oil_gas/natural_gas/feature _articles/2009/pipelinenetwork/pipelinenetwork.pdf. 37 As shown in Table 3 , the maximum potential increase in existing NGCC genera tion to displace coal is 640,128,780 MWh. This number assumes an annual average capacity factor of 85%, but on a given day the existing NGCC p lants could be running at full load to displace coal, whic h is 640,128,780 MWh ÷ 0.85 ÷ 365 days = 2,063,268 MWh per day. The average heat rate for combined cycles in the s tudy group is 7.4596 MMBtus per MWh and the conversio n factor from MMBtus of thousands of cubic feet is 1.028, so the daily gas demand can be calculated as 2,063,268 MWh x 7.4596 MMBtus per MWh ÷ 1.028 ÷ 1,000,000 = 15 BC F per day.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### A balancing factor is that the natural gas industry has been effective at adding large amounts of capacity to the pipeline system. Capacity addition s in 2007 and 2008 were, respectively, 14.9 and 44.6 BCF per day, and as of mid-2009, 31.9 BCF per day was under construction or approved for construction and completion in 2009. Another 62.1 BCF per day of capacity additions are planned for 2010 and 2011, 38 

### which is equivalent to almost 30% of current capacity. It appears that, given sufficient lead time, the natural gas industr y has the ability to install large amounts of additional transportation capacity to meet increase d demand.

Table 7. Illustrative Estimates of Increased Natura l Gas Demand Relative to Electric Power Demand, Based on 2007 Data

Hypothetical Maximum Displacement of Coal by Existing NGCC Plants (2007 data and 85% capacity factor) Half of

Hypothetical Maximum Displacement One Quarter of Hypothetical Maximum Displacement 1. Additional MWh of Existing NGCC Generation 640,12 8,780 320,064,390 160,032,195 2. Required Additional Natural Gas in Trillion Btus (Tbtus) 4,775 2,388 1,194
3. Required Additional Gas as a Percentage of Actual Gas Used for Power Generation in 2007 a 66% 33% 16%

Source: Table 6 and EIA, Annual Energy Review 2008 , Tables 8.4a (http://www.eia.doe.gov/emeu/aer/ contents.html). Notes: The MWh of additional gas-fired generation was conv erted to TBtus using a heat rate of 7.4596 MMBtus of fuel input per MWh. This is the 2007 average annu al heat rate for the study group of 314 combined cycle plants, calculated using the generation and fuel input r eported in the EIA 906/920 database (http://www.eia.doe.gov/cneaf/electricity/page/eia906 _920.html). a. Electric power gas consumption in 2007 was 7,288 T btus. The percentages shown in Line 3 are calculated by dividing this number into the values shown on line 2

. 

# Policy Considerations
As discussed in this report, the potential for disp lacing coal consumption in the power sector by making greater use of existing NGCC power plants de pends on numerous factors. These include:

• The amount of excess NGCC generating capacity availabl e;

• The current operating patterns of coal and NGCC plants , and the amount of flexibility power system operators have for changing tho se patterns;

• Whether or not the transmission grid can deliver pow er from existing NGCC plants to loads currently served by coal plants; and

38 EIA, Expansion of the U.S. Natural Gas Pipeline Network: Ad ditions in 2008 and Projects through 2011 , September 2009, Table 2, http://www.eia.doe.gov/pub/oil_gas/natural _gas/feature_articles/2009/pipelinenetwork/ pipelinenetwork.pdf.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### • Whether there is sufficient natural gas supply, and pipeline and gas storage capacity, to deliver large amounts of additional fue l to gas-fired power plants; and consideration of the environmental impacts of increasing gas production. All of these factors have a time dimension. For example , while existing NGCC plants may have sufficient excess capacity today to displace a mater ial amount of coal generation, this could change in the future as load grows. Therefore a full ana lysis of the potential for gas displacement of coal must take into account future conditions, not justa snapshot of the current situation. There is also the question of cost which, as discus sed in the introduction, is beyond the scope of this report. Clearly, the cost of a coal displacem ent by gas policy is highly uncertain, and depends on such factors as future natural gas and coal prices, any need to build additional pipeline and transmission line facilities, and the cost of carbo n (if any). The economic impacts of a coal displacement by gas policy could also spill over to other parts of the economy. For example, increased power sector demand could drive up the pr ice of natural gas, to the detriment of other residential, commercial, and industrial users. Decrease d production of coal and increased production of natural gas would pose varying costs and b enefits for states and regions. As a step toward addressing these questions, Congre ss may consider chartering a rigorous study of the potential for displacing coal with power from ex isting gas-fired power plants. Such a study would require sophisticated computer modeling to simul ate the operation of the power system, to determine whether there is sufficient excess gas fir ed capacity and the supporting transmission and other infrastructure to displace a significant v olume of coal over the near term. This kind of study might also estimate the direct costs of a gas forcoal policy, such as the impact on electric rates. Because of the large number of uncertainties , such as the future price of natural gas, the study would have to consider several scenarios. Such a study could help Congress judge whether there is sufficient potential to further explore a p olicy of replacing coal generation with increased output from existing gas-fired plants. Congress may also consider chartering an analysis of the potential for directly using gas in existing coal-fired plants, either as a supplementalor primary fuel. As noted in the introduction, large scale use of gas in coal plants raises engineering issues and the question of how many coal plants have adequate pipeline connections. However, burning gas in coal plants would make it possible to displace coal while still using existing transmission lines to meet load, which could be a significant advantage. 39

39 Many coal plants use natural gas as a startup fuel and for flame stabilization during normal operations. Howev er, this is different from running the plant primarily or largely on natural gas. In addition to the engineering issues, even if a coal plant currently uses natural gas as a startup fuel , its existing natural gas pipeline connection may n ot have sufficient capacity to provide enough gas for full loa d (or even large partial load) operation on gas. Ther e are examples of coal units switching to natural gas for environmental r easons (“Marketwatch: Public Service Electric & Gas of New Jersey,” Platts Coal Week , June 22, 1992; “Ill. Power to Shift Vermilion to Gas; Phas e I Decision Kills Coal Solicitation,” Platts Coal Week , October 10, 1994; “PEPCO Mulls NOx Ozone Season’s Eff ect on Coal, Gas, Oil Use,” Platts Coal Week , October 25, 1999.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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# Appendix A. Background on the Electric Power System
This appendix provides background on the components an d operation of the electric power system. Readers familiar with these topics may wish to skim or skip this appendix.


## Power Plants and Power Lines Power plants, transmission systems, and distributio n systems constitute the major components of the existing electric power system, as briefly descr ibed and illustrated below ( Figure A-1 ):

• Generating plants produce electricity, using either combustible fuels s uch as coal, natural gas, and biomass; or non-combustible e nergy sources such as wind, solar energy, or nuclear fuel.

• Transmission lines carry electricity from power plants to demand centers . The higher the voltage of a transmission line the more power it can carry and the fewer the line losses during transmission. Current policy discussions focus on the high voltage network (230 kilovolts (kV) rating and greater) used to move large amounts of power long distances.

• Near customers a step-down transformer reduces voltag e so the power can be carried by low voltage distribution lines for final delivery.

Figure A-1. Elements of the Electric Power System

Source: CRS.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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## Capacity and Energy Capacity is the potential instantaneous output of a g enerating or storage unit, measured in watts. Energy is the actual amount of electricity generated by apower plant or released by a storage device during a time period, measured in watt-hours. The units are usually expressed in thousands (kilowatts and kilowatt-hours) or millions (megawatts and megawatt-hours). For example, the maximum amount of power a 1,000 megawatt (MW) power plant can generate in a year is 8.76 million megawatt-hours (MWh), calculat ed as: 1,000 MW x 8,760 hours in a year = 8.76 million MWh. 

## Capacity Factor Capacity factor is a standard measure of how intensivel y a power plant is utilized. It is the ratio of how much electricity a power plant produced over a period of time, typically a year, compared to how much electricity the plant could have produce d if it operated continuously at full output. For example, as shown in the prior paragraph, the ma ximum possible output of a 1,000 MW power plant in one year is 8.76 million MWh. Assum e that during a year the plant actually produced only 7.0 million MWh. In this case the pla nt’s capacity factor would be 7.0 million MWh ÷ 8.76 million MWh = 81%.


## Generation and Load The demand for electricity (“load”) faced by an electr ic power system varies moment to moment with changes in business and residential activity and the w eather. Load begins growing in the morning as people waken, peaks in the early afternoon, a nd bottoms-out in the late evening and early morning. Figure A-2 shows an illustrative daily load curve. The daily load shape dictates how electric power system s are operated. As shown in Figure A-2 , there is a minimum demand for electricity that occur s throughout the day. This base level of demand is met with “baseload” generating units whic h have low variable operating costs. 40 

### Baseload units can also meet some of the demand abov e the base, and can reduce output when demand is unusually low. The units do this by “ramp ing” generation up and down to meet fluctuations in demand. The greater part of the daily up and down swings in demand is met with “intermediate” units (also referred to as load-following or cycling units ). These units can quickly change their output to match the change in demand (that is, they have a fast “ramp rate”). Load-following plants can also serve as “spinning reserve” units that are running but not putting power on the grid, and are immediately available to meet unanticipated increas es in load or to back up other units that go off-line due to breakdowns.

40Variable costs are costs that vary directly with changes in output. For fossil fuel units the most important v ariable cost is fuel. Solar and wind plants have minimal or no var iable costs, and nuclear plants have low variable costs

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### Figure A-2. Illustrative Daily Load Curve

- 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000Hourly Load (MW)

Midnight to Midnight This report covers generating technologies used to meet intermediate and baseload demand. Peak Demand

Intermediate Demand

Baseload Demand

Source: CRS. 

### The highest daily loads are met with peaking units. T hese units are typically the most expensive to operate, but can quickly start up and shut down to me et brief peaks in demand. Peaking units also serve as spinning reserve and as “quick start” units able to go from shutdown to full load in minutes. A peaking unit typically operates for only a few hundred hours a year. 

## Economic Dispatch and Heat Rate The generating units available to meet system load are “dispatched” (put on-line) in order of lowest variable cost. This is referred to as the “ec onomic dispatch” of a power system’s plants. For a plant that uses combustible fuels (such as coal o r natural gas) a key driver of variable costs is the efficiency with which the plant converts fuel to electricity, as measured by the plant’s “heat rate.” This is the fuel input in British Thermal Uni ts (btus) needed to produce one kilowatt-hour of electricity output. A lower heat rate equates with greater efficiency and lower variable costs. Other things (most importantly, fuel and environmental compliance costs) being equal, the lower a plant’s heat rate, the higher it will stand in th e economic dispatch priority order. Heat rates are inapplicable to plants that do not use combustible f uels, such as nuclear and non-biomass renewable plants. As an illustration of economic dispatch, consider a utility system with coal, nuclear, geothermal, natural gas combined cycle, and natural gas peaking units in its system: (1) Nuclear, coal, and geothermal baseload units, whic h are expensive to build but have low fuel costs and therefore low variable costs, wi ll be the first units to be put online. Other than for planned and forced maintenance, these baseload generators will run throughout the year. (2) Combined cycle units, which are very efficient but use m ore expensive natural gas as a fuel, will meet intermediate load. These cycling pl ants will ramp up and down during the day, and will be turned on and off dozens of time s a year.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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### (3) Peaking plants, using combustion turbines, 41 

### are relatively inefficient and burn natural gas. They run only as needed to meet the highest loa ds. 42 

### An exception to this straightforward economic dispatc h are “variable renewable” power plants— wind and solar—that do not fall neatly into the cat egories of baseload, intermediate, and peaking plants. Variable renewable generation is used as av ailable to meet demand. Because these resources have very low variable costs they are idea lly used to displace generation from gas-fired combined cycle plants and peaking units with higher variable costs. However, if wind or solar generation is available when demand is low (such as a weekend or, in the case of wind, in the evening), the renewable output could displace coal gen eration. Power systems must meet all firm loads at all times, but variable renewable plants do not have firm levels of output because they depend on the wea ther. They are not firm resources because there is no guarantee that the plant can generate at a specific load level at a given point in time. 43 

### Variable renewable generation can be made firm by l inking wind and solar plants to electricity storage, but with current technology, storage options are limited and expensive.

41 A combustion turbine is an adaption of jet engine tec hnology to electric power generation. A combustion turbine can either be used stand-alone as a peaking unit, or as part of a more complex combined cycle plant used to meet intermediate and baseload demand. 42 This alignment of generating technologies is for n ew construction using current technology. The existin g mix of generating units in the United States contains many exceptio ns to this alignment of load to types of generating plants, due to changes in technology and economics. For instanc e, there are natural gas and oil-fired units built de cades ago as baseload stations that now operate as cycling or pea king plants because high fuel prices and poor efficiency has made them economically marginal. Some of these older plants were built close to load centers and are now used as rel iability must-run (RMR) generators that under certain circumstances m ust be operated, regardless of cost, to maintain the stability of the transmission grid. 43 Hydroelectric generation is a special case. Hydro gene ration is very low cost and is firm, dispatchable cap acity to the degree there is water in the dam’s reservoir. However, operators have to consider not only how much water is current ly available, but how much may be available in upcoming months, and competing demands for the water, such as drinking water supply, irrigation, and recreation. These factor s can make hydro dispatch decisions very complex. In general hydro is used to meet load during high demand hours, when it can displace expensive peaking and cycling un its, but if hydro is abundant it can also displace baseload coa l plants.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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# Appendix B. Combined Cycle Technology
The combined cycle achieves a high level of efficiency b y capturing waste heat that would otherwise be lost in the generating process. As sh own in Figure B-1 for a combined cycle unit fueled by natural gas, the gas is fed into a combust ion turbine which burns the fuel to power a generator. The exhaust from the combustion turbine i s then directed to a specialized type of boiler (the heat recovery steam generator or HRSG) where the heat in the exhaust gases is used to produce steam, which in turn drives a second generato r. In combined heat and power (CHP) applications, part of the steam is used to support an industrial process or to provide space heating, further increasing the total energy efficiency of the syst em.

Figure B-1. Schematic of a Combined Cycle Power Plant

Source: CRS, based on a Calpine Corp. illustration. 

### Combined cycles are built in different configurations, dep ending in part on the amount of capacity needed. Figure B-1 illustrates a configuration in which one combustion turbine feeds one HRSG; this is referred to as “1x1” design. In higher capacity 2x1 or 3x1 designs, multiple combustion turbines feed a single HRSG. These options illustrate the modular (or “building block”) nature of combined cycles, which facilitates ra pid and flexible construction of new generating units to match changes in demand. In the United States the predominant fuel used in comb ined cycle plants is natural gas. Combined cycles can also be designed to use fuel oil as a primary or backup fuel. Gasified coal can also be used as the fuel in an integrated gasification comb ined cycle (IGCC) plant. There are currently two prototype IGCC plant operating in the United Stat es and a commercial-scale unit is under construction in Indiana.Displacing Coal with Generation from Existing Natur al Gas-Fired Power Plants

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## Author Contact Information

Stan Mark Kaplan Specialist in Energy and Environmental Policy skaplan@crs.loc.gov, 7-9529