Energy transition and the role of new natural gas turbines for power production : the case of GT11N2 M generators

We study General Electric's new combined-cycle natural gas generator called GT11N2 M upgrade and quantify its economic benefits and the environmental implications in Ontario. We propose a structural power supply chain model involving upstream supplier General Electric and downstream power firm TransAlta at Sarnia, construct generation, service and maintenance cost functions, and calibrate different customer demand curves using actual market and firm data in the Ontario market. We solve for Stackelberg equilibrium outcomes, and quantify prices, outputs, and emissions based on efficiency rates of GT11N2 M. We consider two types of cost efficiencies implied by GT11N2 M: upstream service and maintenance cost efficiency experienced by General Electric and downstream fuel cost efficiency experienced by TransAlta. We provide new insights in the realm of technology adoption. We find in equilibrium that there exists a large variation in electricity generation over operational modes of GT11N2 M: the total generation can increase in the range of 5% (under "Lifetime" mode) to 18% (under "Maximum Continuous Load" mode). The output variation is nonlinear and the amount of carbon emissions is largely impacted by operating modes. In particular, the total greenhouse gas emission is expected to increase by 12% in the mixed-mode. Consequently, a policy implication of this research is that clean energy adoption facilitated by GT11N2 M is expected to increase carbon emission due to the "rebound effect".