Natural gas costs

The use of natural gas to generate electricity depends crucially on the cost of the gas. Natural gas is a more costly fuel than coal, the other major fossil fuel used for power generation. However the capital cost of a coal-fired power plant is significantly higher than that of a gas-fired power station. Hence the total fuel bill over the lifetime of each plant determines whether coal or gas can produce the cheapest electricity.

Utility gas prices are often closely linked to the price of oil, though deregulation of the gas industry has weakened the link in some countries

Table 4.2 Global gas prices for power generation ($/GJ)

1997

1998

1999

2000

2001

2002

Finland

3.06

2.87

2.58

2.70

2.61

2.61

Germany

3.78

3.51

3.35

3.66

-

-

Taiwan

6.10

5.23

4.83

5.88

5.86

-

UK

2.94

3.01

2.75

2.51

2.65

1.94

USA

2.63

2.25

2.44

4.11

4.42

3.42

Source: US Energy Information Administration.

Source: US Energy Information Administration.

such as the UK. One reason for this link is that many gas-fired power plants can easily be fired with oil and would switch to oil if natural gas became more expensive. This fixes an upper limit on the cost of natural gas. (It is worth noting, however, that while some gas-fired steam plants can burn residual oil, gas turbines require distillate which is more expensive. Even so, most gas turbine plants are designed for dual fuel use, that is gas or oil.)

Table 4.2 collects annual prices of gas for power generation from a handful of countries between 1997 and 2002. These give a broad indication of how costs vary across globe. The Finnish prices in the table are remarkably stable over the 6-year period, whereas in the UK, princes fluctuated much more. However the USA showed the largest range of prices, with the cost of gas for power generation soaring in 2000 and 2001. Such volatility can play havoc with power generation economics.

Where gas supplies are limited or non-existent the possibility exists to import liquefied natural gas (LNG). LNG costs more than piped gas when the cost of liquefaction, transportation and regasification are taken into account. This is illustrated in Table 4.2 with the gas prices for Taiwan which are consistently the highest quoted. Even as such a high price, LNG has proved attractive to countries like Japan, Taiwan and South Korea. In 1999 25% of exported natural gas was in the form of LNG.4 Of this 75% was transported to the Asia-Pacific region.

Solar Stirling Engine Basics Explained

Solar Stirling Engine Basics Explained

The solar Stirling engine is progressively becoming a viable alternative to solar panels for its higher efficiency. Stirling engines might be the best way to harvest the power provided by the sun. This is an easy-to-understand explanation of how Stirling engines work, the different types, and why they are more efficient than steam engines.

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