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2009 State of the Market Report

Prices and Revenues

revenue a new unit would need to earn in the Midwest ISO wholesale markets to make the investment economic). Because combined cycle generators have substantially lower production costs per MWh than simple-cycle combustion turbine generators, they run more frequently (more than 40 percent of all hours in 2009, compared to roughly 10 percent for combustion turbines). Hence, the estimated net revenues for CC generators from the energy and AS markets are substantially higher. Capacity revenues, however, are constant across unit types and regions. Since combustion turbines provide far less energy, the capacity revenues have a larger relative impact on a combustion turbine’s net revenues than on a combined cycle unit’s net revenues.

Figure 6: Net Revenue and Operating Hours 2007 – 2009

$150,000

5,000

Net Revenue ($/MW-year)

$120,000

$90,000

$60,000

$30,000

Estimated Annual Cost of a New CT and CC

Ancillary Services Energy Capacity Operating Hours

4,000

3,000

2,000

1,000

Operating Hours

$0

0

2007 2008 2009

2007 2008 2009

2007 2008 2009

2007 2008 2009

2007 2008 2009

2007 2008 2009

2007 2008 2009

2007 2008 2009

2007 2008 2009

2007 2008 2009

Central

East

West

WUMS

North WUMS

Central

East

West

WUMS

North WUMS

Combustion Turbine

Combined Cycle

Net revenues for a new combined cycle generator in 2009 ranged from $22,000 to $49,000 per MW-year in the regions shown, while net revenues for a new combustion turbine range from $20,000 to $29,000 per MW-year. This variation in net revenues across the footprint is expected. For example, net revenues are substantially higher in the East than in the West due to prevailing congestion patterns.

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