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Natural gas

Rising Costs of New Gas Power Plants in the United States Expected to Persist

Strategic Insights

— 2 min read

The cost of constructing new gas combustion turbine and combined cycle gas turbine power plants in the United States is likely to continue increasing, according to a joint market data analysis by GridLab, Energy Futures Group, and Halcyon. Recent costs of combined-cycle gas turbine projects have reported costs of $2,000/kW, significantly outpacing the costs of plants scheduled for completion in 2026 and 2027, which are estimated to be $1,116/kW to $1,427/kW respectively. This trend is attributed to rising costs of construction, fuel, and pipeline costs. The analysis highlights the importance of updating cost assumptions on building new gas plants and considering alternatives that could be installed for far less to ensure affordable and reliable energy.

Key Takeaways:

  • The cost of new gas combustion turbine and combined cycle gas turbine power plants in the United States is likely to continue increasing, with recent costs of combined-cycle gas turbine projects reporting $2,000/kW.
  • The costs of plants scheduled for completion in 2026 and 2027 are estimated to be $1,116/kW to $1,427/kW, respectively, significantly lower than the current costs.
  • The rising costs of construction, fuel, and pipeline costs are driving the upward trend in gas plant costs.
  • The analysis highlights the importance of considering alternatives to building new gas plants, such as plants that can be installed for far less, to ensure affordable and reliable energy.
  • The data presented in the paper suggest that the upward trend in gas capital costs is likely to continue as long as demand for turbines remains strong.
  • GridLab Executive Director Ric O'Connell noted that "From construction to fuel to pipeline costs, the cost of new gas is rising," emphasizing the need to update cost assumptions.
  • Energy Futures Group Principal Anna Sommer emphasized that "gas capital costs have been increasing at a pace that outstrips inflation" and it is likely to continue.

Statistics:

  • Recent costs of combined-cycle gas turbine projects report costs of $2,000/kW.
  • Costs of plants scheduled for completion in 2026 and 2027 are estimated to be $1,116/kW to $1,427/kW, respectively.
  • Gas capital costs have been increasing at a pace that outstrips inflation.
  • The analysis was conducted in collaboration by GridLab, Energy Futures Group, and Halcyon.
  • The analysis used data from utility Integrated Resource Plans (IRPs), Certificates of Public Convenience and Necessity (CPCNs), publicly-available datasets, and recent financial reports from major gas turbine original equipment manufacturers.

Sources:

  • GridLab
  • Energy Futures Group
  • Halcyon
  • American Public Power Association
  • Utility Integrated Resource Plans (IRPs)
  • Certificates of Public Convenience and Necessity (CPCNs)
  • Publicly-available datasets
  • Recent financial reports from major gas turbine original equipment manufacturers

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