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Payback of natural gas turbines: A retrospective analysis with implications for decarbonizing grids

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  • Carvalho, Rexon
  • Hittinger, Eric
  • Williams, Eric

Abstract

The low capital cost, low lead times, and flexible operation of natural gas combustion turbines are qualitatively different from other power generation technologies and have the potential for faster investment payback. We explore this hypothesis with a retrospective analysis of natural gas combustion turbine economics in six locations, with revenue from energy, frequency regulation, reserve, and capacity markets. Using historical data, we find payback periods from 8.5 to 15 years. Gas turbines can be financially justified with a single profitable decade of service and are thus more economically compatible with a decarbonizing grid than other types of fossil fuel infrastructure.

Suggested Citation

  • Carvalho, Rexon & Hittinger, Eric & Williams, Eric, 2021. "Payback of natural gas turbines: A retrospective analysis with implications for decarbonizing grids," Utilities Policy, Elsevier, vol. 73(C).
    • Handle: RePEc:eee:juipol:v:73:y:2021:i:c:s0957178721001417
    DOI: 10.1016/j.jup.2021.101307
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    References listed on IDEAS

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    1. Pfeiffer, Alexander & Millar, Richard & Hepburn, Cameron & Beinhocker, Eric, 2016. "The ‘2°C capital stock’ for electricity generation: Committed cumulative carbon emissions from the electricity generation sector and the transition to a green economy," Applied Energy, Elsevier, vol. 179(C), pages 1395-1408.
    2. Tola, Vittorio & Pettinau, Alberto, 2014. "Power generation plants with carbon capture and storage: A techno-economic comparison between coal combustion and gasification technologies," Applied Energy, Elsevier, vol. 113(C), pages 1461-1474.
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