Power plant upgrades and utility coordination have saved around $370 million in the Central Railbelt in the last 10 years.
Was it worth it? And what’s next?
There are a lot of gas power plants on the Railbelt. Some of them are relatively new and efficient, others are really old and inefficient. Each utility with access to gas has at least one gas plant, and if they were all turned on at once, they’d produce far more power than the Railbelt could possibly use.
This gets brought up a lot in a couple of contexts.
Were the new power plants and upgrades in the 2010s a good investment in efficiency, or wasteful overbuilding?
How much fuel can be saved by “economic dispatch” -- always using the most efficient plant, regardless of which utility owns it?
As the proud owner of a spreadsheet full of publicly available Railbelt utility data, I decided to do this analysis myself -- looking at the power production, gas use, and gas costs in the Railbelt’s central region from 2009-2022.
Over this time, there have been a series of efficiency initiatives in the Railbelt’s central region. First, there were a series of changes to the physical system. Chugach built the South Central Power Project (2013), MEA built its Eklutna gas plant (2015), and ML&P upgraded plant 2 to plant 2a (2017). Next, there were a series of changes in the way the utilities coordinated to use these plants. First there was a loose power pool between the three central utilities (2017). Then Chugach bought ML and P, merging three utilities into two (2020). Finally, Chugach and MEA were mandated to form an obligatory “tight” power pool (first full year in 2022).
Generation from the new and upgraded plants more or less entirely replaced generation from the old plants by 2017. This had a substantial impact on efficiency -- improving it by 18%.
Any improvement after 2017 can likely be attributed to consolidation of utilities and better coordination between them. Since then, fuel efficiency has improved by an additional 6.5%, mostly in the first couple years of the loose power pool agreement. Efficiency improvements plateaued around 2021 with the completion of the Chugach and ML&P merger.
Plant upgrades have saved an average of 4.6 Bcf of gas each year since 2013, and an average of $32.5 million on fuel costs each year (using Cook Inlet Prevailing Value gas prices). From 2013 through 2022, this adds up to 46.2 Bcf of gas, $325 million, and 2.5 million metric tons of CO2 emissions. Pooling and consolidation saved an additional 1.2 Bcf of gas and $9.4 million per year, for a total of 6 Bcf, $47 million, and 335,000 metric tons of CO2.
News articles at the time estimated the three new plants cost around $1 billion in total (SPP, 2a, Eklutna). With that simplistic framing, about a third of that cost has been recovered in fuel savings.
If it took 10 years to save a third of that cost, will it take 20 more years to get back where we started?
Probably not. If the plants hadn’t been replaced, presumably some fraction of that $1 billion would have been used to replace worn out components of the older plants. And as gas prices increase, each portion of gas saved is worth more money. Recent reports on the Cook Inlet gas crisis put future costs at around $12-$15 per Mcf. At those prices, the fuel savings from the newer plants nearly double -- to around $60-$70 million per year. On the flip side, that $1 billion number likely doesn’t include the ongoing interest payments for the loans used to build the plants.
What’s next?
By these metrics, our gas power will probably never get more efficient. It’ll likely get worse. But that’s actually a good thing. And the coordination between utilities will only get more critical.
The graphs I’ve presented are looking at gas power only. We’ve likely achieved most of the savings we can in generating that power more efficiently. But we have a lot of opportunities left to use less gas power in the first place.
Energy conservation has already saved a lot of gas. Even after accounting for a small shift from central region power production to Kenai Peninsula power production, gas power in the central region has declined by 18% -- an impact as large as the impact of all the power plant upgrades.
The biggest opportunities for future savings are in renewable energy. If all of the central region’s gas power came from the current most efficient plant (not actually possible), we’d save the equivalent of 96,000 MWh per year. Just one of the proposed renewable projects in the region (Little Mount Susitna Wind) would make more than four times that much energy.
If we replace a large amount of gas power with renewable energy, the remaining gas power will likely become less efficient. Gas plants run less efficiently at lower loads, so as we use them less, the fuel per MWh goes up for that remaining gas power, even as we save a ton of fuel overall. This makes the coordination of how we dispatch the plants especially important. For example, in a future scenario where we need half as much power from those three central gas plants, running them all at half the load will be much more wasteful than turning one or more of them off, and power pooling and economic dispatch will matter more than it does now.
Analysis details
All data on power plants is from public RCA filings, EIA data, and EPA filings. Gas prices are from the state’s Cook Inlet Prevailing Value numbers. I looked at central region gas plants only, in order to ignore the impact of transmission constraints. Some of this power is used outside the region, largely by GVEA. To calculate savings I looked simply at gas use per MWh and the prevailing Cook Inlet gas price for each year. Actual gas savings were probably less, since Chugach (and previously ML and P) gets a substantial amount of gas from its own Beluga River gas field at a lower price. Operation and Maintenance costs are ignored. All money values are nominal values.