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Gas Plant Upgrades May Push Prices Down

July 22, 2015 By Cheryl Kaften

Efforts by owners of natural gas-fired power plants in New England to improve the heat rates of their facilities are likely to increase the capacity of those plants – and in doing so, inevitably will push down the region’s wholesale power costs, the New England Power Generators Association President Dan Dolan opined on July 16.

Asked by Platts about Emera Energy’s intentions to upgrade its 265 MW combined-cycle natural gas plant in Tiverton, Rhode Island, Dolan commented: “I think some folks – Emera Energy certainly is an example – are finding that one of the best ways to add efficient generating capacity [in New England] is to do that at an existing facility rather than build a new plant” at a greenfield site.

Dolan said New England’s capacity market design “puts a significant onus on the operators to ensure their plants are available and can quickly and efficiently respond” when called upon to generate power,” and improvements like [those Emera Energy is planning at the Tiverton facility] can be seen as a way of responding to that market design.”

He added: “As the fleet gets more efficient and heat rates improve, that will be reflected in energy prices in the wholesale market.”

Nova Scotia, Canada-based Emera Energy announced on July 15 that it had selected General Electric to upgrade the 15-year-old Tiverton Power station in Rhode Island in an effort to increase the efficiency, capacity and long-term availability of the power plant and reduce its operating costs and environmental impacts. The company acquired the plant in 2013.

The upgrades of the plant’s 7F.03 gas turbines will help Tiverton to save an estimated $1 million in fuel costs annually and boost the plant’s combined-cycle output by 22 MW. Moreover, the gas turbine’s heat rate (fuel efficiency) is expected to improve up to 3.4 percent at ISO conditions while its output is expected to increase up to 10.4 percent.

Emera VP of Operations Dave Pickles said that “by producing more megawatts more efficiently, this also will help improve [the company’s] competitive position against other power plants in the ISO-New England dispatch stack,” adding, “The upgrade of the [Tiverton] unit will allow us to be more cost-effective in overall maintenance plans, as well as to leverage value from the improvements in both output and heat rate.”

Dolan told Platts that he believes there are likely to be other efforts to upgrade existing gas-fired plants in New England.

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