Regulation, Supply and Demand
- The Loyola de Palacio Series on European Energy Policy
Chapter 2: Gas demand: the role of gas-fired power plants
One of the most important incentives for developing gas-fired power plants (GFPPs) was the matching of the features of recent gas and electricity markets and the flexibility of GFPP technologies. In short, we could say that the operational flexibility of the GFPP is a consequence of its technical feature of allowing fast start-up and shutdown. Thus, flexible GFPP operation is able to fulfil short-term electricity demand (Espey and Espey, 2004; Roques et al., 2008). In this chapter we will show what the flexibility offered by GFPPs means to the electricity market through the perspective of the gas market dynamic. Traditionally, natural gas demand used to be characterized by seasonal cycles. Each group of gas consumers has a typical demand profile, and they interact in the gas market in order to form the gas flow profile. ‘Traditional’ gas consumers were household and industrial consumers, the main drivers of demand until the 1990s. The massive introduction of GFPP gas demand in the gas market and the increased importance that it took in the total gas demand portfolio has changed the gas demand profile. This chapter first analyses the GFPP demand profile and the impact of the GFPP in the entire gas demand. In the second section we investigate how the characteristics of GFPP gas demand interact in the gas market with gas supply and storage. We argue that these interactions change the observed and the expected gas flow.
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