NEWS: Energy and environmental policy, Resource planning
Paper: Natural Gas Generation in China

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August 18, 2013

Dr. Fredrich Kahrl, Gabe Kwok, and Dr. Jim Williams of E3 were co-authors on a recent paper, “Using Natural Gas Generation to Improve Power System Efficiency in China” published in Energy Policy. The paper finds that, although it is commonly argued that natural gas-fired generation is not cost-competitive in China, these arguments ignore the different roles – peaking, load following, and baseload generation – that natural gas generation plays in power systems.

Using a detailed generation cost model and a case study from Guangxi Province, the paper argues that natural gas is, in fact, cost-competitive for peaking generation in China, and that using natural gas generation in this role would lead to overall improvements in power system efficiency. The largest barrier to using gas-fired generation for peaking generation in China is generation pricing, which could be addressed through modest reforms to support low capacity factor generation.

Dr. Fredrich Kahrl, Gabe Kwok, and Dr. Jim Williams of E3 were co-authors on a recent paper, “Strategies for Expanding Natural Gas-fired Electricity Generation in China: Economics and Policy” published in Energy Strategy Reviews. Based on a detailed generation cost model, the paper analyzes the changes necessary to increase the share of natural gas-fired generation in China’s electricity mix, focusing on load following and baseload generation. While natural gas is not currently cost-competitive with coal for load following and baseload generation, it could become so with policy strategies that lead to relatively modest (10-30%) decreases in relative capital costs and fuel prices, particularly if a small price of around $5 to $15 per tonne CO2 were imposed on CO2 emissions.

filed under: Energy and environmental policy, Resource planning