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Conclusions
- Generation costs for base loaded gas-based wholesale electricity generation technologies tend to fall in the 4 c/kWh to 6 c/kWh area, whereas coal is in the 6 to 10 c/kWh area.
- At fixed input assumptions, and higher load factors, all gas-fired technologies are at a similar unit cost; while all coal fired technologies are at similar (but greater) unit cost.
- The unit cost of coal-fired plant is heavily influenced by both capital and fuel costs, while unit costs for gas fired plant are dominated by fuel cost.
- It is anticipated that capital, operation, maintenance costs and efficiencies will change through time. There is expected to be a larger decrease in unit costs for advanced technologies up to 2012 with little change after that as they mature.
- Reducing the discount rate from 10% to 5% reduces the capital cost component for coal-fired plant by about 1.7 c/kWh and 0.5 c/kWh for gas fired plant. Increasing the fuel cost by $0.5/GJ increases the fuel component of the electricity cost for both fuels by about 0.4 c/kWh.
- Unless there is a dramatic fall in coal technology capital and operating costs or a dramatic rise in gas prices to around $9/GJ little of this coal plant may be installed over the review period.
- On the other hand niche markets such as Distributed Generation could experience high gas prices due to their small size, opening opportunities for small coal plant.
- Similarly niche opportunities for coal may exist in the South Island where the only gas alternative is LPG but where thermal plant must compete with abundant hydro resources.
- The advanced gas turbine appears to be the most economical over the widest plant factor range just losing out to the gas turbine in a peaking role when the load factor is below 30%. For base loaded plant the advanced gas turbine with its low capital cost and good efficiency has slight economic advantages over the more complex combined cycles with their higher capital costs and higher efficiencies. Nevertheless, current focus remains on gas combined cycle plant.
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