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predicated on natural gas being quite cheap

Jerome hammers every so often that this is not the main driver of investment in gas fired plants.

Instead, he argues, debt financing terms favor short recoup times and thus production characterized by low capital costs.

One could add that being margin producers, gas-fired plant owners in practice do not have to worry about gas prices as they are electricity price setters.

Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine

by UnEstranAvecVueSurMer (holopherne ahem gmail) on Fri Apr 9th, 2010 at 11:18:45 AM EST
[ Parent ]
cheap gas prices in the 90s certainly helped the industry reach the size it got to (and the ability of the private sector to invest in it) by ensuring that gas-fired power plants would be used enough during the day (ie as semi load or even base load) to ensure that they would indeed become price setters...

Wind power
by Jerome a Paris (etg@eurotrib.com) on Fri Apr 9th, 2010 at 12:04:01 PM EST
[ Parent ]
I don't know about Europe, but in the US, there were two types of natural gas plant built during the late 1990s through the start of the 2000s: Baseload and peaking.

It's notable that the capacity factor of natural gas fired plants in the non-utility is very, very low.  

What's interesting is that the capacity of these plants is more than enough to provide backup generation for the introduction of wind and solar to the grid in a number of states.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Fri Apr 9th, 2010 at 12:37:44 PM EST
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