Payback of natural gas turbines: A retrospective analysis with implications for decarbonizing grids

Rexon Carvalho, Eric Hittinger and Eric Williams

Utilities Policy, 2021, vol. 73, issue C

Abstract: The low capital cost, low lead times, and flexible operation of natural gas combustion turbines are qualitatively different from other power generation technologies and have the potential for faster investment payback. We explore this hypothesis with a retrospective analysis of natural gas combustion turbine economics in six locations, with revenue from energy, frequency regulation, reserve, and capacity markets. Using historical data, we find payback periods from 8.5 to 15 years. Gas turbines can be financially justified with a single profitable decade of service and are thus more economically compatible with a decarbonizing grid than other types of fossil fuel infrastructure.

Keywords: Natural gas generation; Historical analysis; Natural gas turbine (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:73:y:2021:i:c:s0957178721001417

DOI: 10.1016/j.jup.2021.101307

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