The natural hedge of a gas-fired power plant

The natural hedge of a gas-fired power plant

Electricity industries worldwide have been restructured in order to introduce competition.As a result, decisionmakers are exposed to volatile electricity prices, which are positively correlated with those of natural gas in markets with price-setting gas-fired power plants. Consequently, gas-fired plants are said to enjoy a “natural hedge.” We explore the properties of such a built-in hedge for ...

Natural Gas-Based Power Plant

Flexibility and Technology Choice in Gas Fired Power Plant Investments

The value of a gas fired power plant depends on the spark spread, defined as the difference between the unit price of electricity and the cost of gas. We model the spark spread using two-factor model, allowing mean-reversion in short-term variations and uncertainty in the equilibrium price to which prices revert. We analyze two types of gas plants. The first type is a base load plant, generatin...

Cycling coal and natural gas-fired power plants with CCS

The profitability impacts of solvent storage are modeled for new coal and natural gas-fired power plants with amine and ammonia-based post-combustion CCS facing variable electricity prices. With perfect information of future prices, up to 3 hours of solvent storage was valuable due to price volatility at carbon prices up to $40/tonne CO2 and no regenerator undersize. With imperfect information ...

Cost analysis of a coal-fired power plant using the NPV method

The present study investigates the impact of various factors affecting coal-fired power plant economics of 210 MW subcritical unit situated in north India for electricity generation. In this paper, the cost data of various units of thermal power plant in terms of power output capacity have been fitted using power law with the help of the data collected from a literature search. To have a realis...