Senegal’s national gas reserves will mainly be used to generate electricity. Authorities expect national gas infrastructure projects to be commissioned between 2025 and 2026, provided there are no delays. The monetization of these important energy resources is the basis of the government’s new ambitions in the conversion of gas into electricity.
In this context, the global technology group Wärtsilä has carried out in-depth studies which analyze the economic impact of the various gas-to-electric strategies available to Senegal. Two very different technologies are competing to meet the country’s gas-to-power ambitions: combined cycle gas turbines (CCGT) and gas engines (ICE).
These studies revealed very significant system cost differences between the two main gas-to-electric technologies that the country is currently considering. Contrary to popular belief, gas engines are in fact much better suited than combined cycle gas turbines to profitably harness energy from Senegal’s new gas resources, the study reveals. The total cost differences between the two technologies could reach up to 480 million USD until 2035 depending on the scenarios.
Two competing and very different technologies
State-of-the-art energy mix models developed by Wärtsilä, which builds customized energy scenarios to identify the cost-optimal way to deliver new generation capacity for a specific country, show that ICE and CCGT technologies have cost differences significant for the gas. to fuel the new construction program until 2035.
Although these two technologies are equally proven and reliable, they are very different in terms of the profiles in which they can operate. CCGT is a technology that was developed for interconnected European electricity markets, where it can operate at 90% load factor at all times. On the other hand, flexible ICE technology can operate efficiently in all operating profiles and adapt seamlessly to all other generation technologies that will make up the country’s energy mix.
In particular, our study reveals that when operating a power grid of limited size such as Senegal’s 1 GW national grid, relying on CCGTs to significantly expand grid capacity would be extremely costly in all scenarios. possible.
Cost differences between technologies are due to a number of factors. First of all, hot climates have a negative impact on the power of gas turbines more than on that of gas engines.
Second, thanks to Senegal’s early access to cheap domestic gas, operating costs become less impactful than investment costs. In other words, since low gas prices lower operating costs, it is financially sound for the country to rely on ICE power plants, which are cheaper to build.
The modularity of the technology also plays a key role. Senegal is expected to need an additional 60 to 80 MW of generation capacity each year to meet growing demand. This is far below the capacity of typical CCGT plants which are on average 300-400 MW that need to be built all at once, resulting in unnecessary expense. Power plants, on the other hand, are modular, meaning they can be built exactly when the country needs them, and expanded if needed.
The numbers at stake are important. The model shows that if Senegal chooses to favor CCGT plants at the expense of ICE-gaz, this will lead to up to $240 million in additional cost for the system by 2035. The difference in cost between the technologies may even reach 350 million. USD in favor of ICE technology if Senegal also chooses to build new renewable energy capacity in the next decade.
Risk management of potential gas infrastructure delays
The development of gas infrastructure is a complex and long-term undertaking. Program delays are not uncommon, causing gas supply disruptions that will have a huge financial impact on the operation of CCGT plants.
Nigeria knows something about it. Last year alone, major gas supply problems caused shutdowns at some of the country’s largest gas turbine power plants. Since gas turbines operate on a continuous combustion process, they require a constant supply of gas and a stable distributed load to generate constant power output. If supply is interrupted, shutdowns occur, straining the entire system. ICE-Gas plants, on the other hand, are designed to adjust their operational profile over time and increase the flexibility of the system. Due to their flexible operating profile, they were able to maintain a much higher level of availability.
The study deepened the analysis of the financial impact of a 2-year delay in the gas infrastructure program. It demonstrates that if the country decided to invest in gas engines, the cost of gas delay would be $550 million, while a CCGT-dominated system would result in an astronomical overcost of $770 million.
Either way, the new generation capacity of ICE-Gas will minimize the total cost of electricity in Senegal under all possible scenarios. If Senegal is to meet growing electricity demand in a cost-optimal way, at least 300 MW of new ICE-Gas capacity will be needed by 2026.