World Energy Outlook 2006

y insufficient LNG infrastructure. In many cases, the generating cost of new
coal steam plants is not only lower than the generating cost of CCGTs but also
lower than the cost of gas, which represents more than three-quarters of
total CCGT generating costs. IGCC plants are not yet competitive. There
are several projects now under construction or planned in the United States
(16 GW, or about one-fifth of total planned coal-fired capacity), supported by
government incentives. Their competitiveness is expected to improve over time
along with technical improvements, capital cost reductions and stricter limits
on conventional pollutants. In the OECD Pacific region, coal steam
technology is generally the most competitive option.
In Europe, coal-fired generation now appears to be cheaper than gas-fired
generation. The difference between the two is less pronounced than in the United
States, because European coal prices, on average, are about twice as high and gas
prices somewhat lower. Most power plants now under construction or planned
to be built over the next few years are CCGTs. In liberalised markets, the
operating flexibility of CCGTs makes them an attractive choice. For CCGTs,
fixed costs make up a lower proportion of total costs than is the case for coal and
nuclear plants, so that the generating costs are less affected by a low capacity
factor (Figure 6.8). CCGT plants can be built relatively quickly, usually in about
three years and sometimes less. Expectations about stricter CO 2 -emission
regulations favour gas rather than coal. This trend is expected to change gradually,
in favour of coal, as concerns grow over the security of gas supply. Plans to build
new coal-fired power plants in some European countries are growing.
US cents per kWh
10
9
8
7
6
5
Figure 6.8: Impact of Capacity Factor on Generating Costs
4
50% 60% 70% 80% 90%
capacity factor
Nuclear CCGT Coal steam IGCC
146 World Energy Outlook 2006 - THE REFERENCE SCENARIO
© OECD/IEA, 2007