US power plant market drives energy crisis

15 Aug 2000 Talk of an energy crisis in the US is now in full swing.

Massive US investment in gas-fired power is one of the leading causes of an impending natural gas shortage. With the majority of the 100GW worth of gas turbines ordered over the last two years not yet installed, the situation shows no sign of abating.

The American Gas Association (AGA) has warned of natural gas price spikes as winter approaches. Wholesale prices, which have already doubled over the past year, will see further increases as storage levels fall and demand continues to spiral. Customers with interruptible contracts could see their supplies cut off due to prohibitive costs.

Increasing demand has been driven mainly by the massive new build of gas-fired power generation in the US since mid-1998. Ironically, this was brought about by a lack of electricity supply in some States, particularly in the mid-West. This is now having a direct impact on gas supply as the first wave of that investment is now generating capacity on the ground.

The first stage of investment was for gas-fired peaking plants, which have a high fuel consumption for the electricity they produce and will be used more than usual when 22GW of nuclear capacity is shut down for maintenance in September, further reducing gas storage levels. Further to the peaking capacity, the first numbers of combined cycle plants ordered in the last two years are now being completed, and consumption in the power generation sector is set to grow rapidly. This growth will not abate, with the majority of over 100GW of new gas turbines ordered in 1998 and 1999 not yet operational, and the gas turbine market as strong as ever.

http://www.datamonitor.com/viewnewsstory.asp?id=807

-- Martin Thompson (mthom1927@aol.com), August 15, 2000