Page 99 - Piston Engine-Based Power Plants

90 Piston Engine-Based Power Plants

When prices fluctuate by this much, the economics fluctuate too. It
may be cost-effective to build a power plant using diesel fuel but by
the time the plant enters service, the cost may be too high for it to be
economical to operate. This level of risk must always be considered.

Natural gas has been subjected to similar fluctuations. The global
cost of natural gas is often linked to the cost of oil but this equation
does not always hold good and there are wide regional variations,
depending upon the source of the gas. This is particularly striking in
the United States where the development of shale gas reserves during
the 21st century has had a dramatic effect, reducing the price of natu-
ral gas in that country and making it the fuel of choice for many types
of power plant including reciprocating engines. Natural gas in the
United States was trading in 2016 at less than one-third of its price in
2008. The price of natural gas in the United States is also much lower
than in most other regions of the world, though all have seen the price
fall over the past 8 10 years. As with oil, it is therefore important to
take account of the risk associated with price fluctuations when plan-
ning generating capacity based on natural gas.

CAPITAL COSTS

The capital cost of an engine is also an important part of the LCOE
equation. In some cases it can be the sole determining factor when a
decision about power generating technology is made. The lowest cost
engines available are small petrol-driven devices based on car engines
which are manufactured in large numbers each year. These engines can
be purchased as stand-by generators for as little as $250/kW. Such
engines are cheap so they are well suited to applications where they
will only be required to operate infrequently. However they are expen-
sive to run since their energy conversion efficiency is relatively low and
they have short lifetimes and require the extensive and regular mainte-
nance of an automotive engine. Against that, there are technicians in
just about every part of the world who are capable of maintaining
such an engine.
Large engines designed for power generation are generally much
more expensive. Natural gas-fired engines of around 300 kW are likely
to cost around $2000/kW. While detailed cost data tends to be proprie-
tary, evidence suggests that capital costs drop as engine size rises into