When did Electric Heat become cheaper than Natural Gas

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texie said:
Of course they now want to close and tear down a perfectly good and modern plant some 15 years before it is even amortized and paid for. The height of fiscal irresponsibility.
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The existing plant is a sunk cost. So all that matters is the future cost of operation vs the alternatives. Continuing to operate it when there are less costly alternatives would be fiscally irresponsible. Of course, I don't know the details of the economic analysis for that particular plant.

Cheers, Wayne
 
wwhitney said:
The existing plant is a sunk cost. So all that matters is the future cost of operation vs the alternatives. Continuing to operate it when there are less costly alternatives would be fiscally irresponsible. Of course, I don't know the details of the economic analysis for that particular plant.

Cheers, Wayne
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Yes an example of the sunk cost fallacy in economics

"The sunk cost fallacy means that we are making decisions that are irrational and lead to suboptimal outcomes. We are focused on our past investments instead of our present and future costs and benefits, meaning that we commit ourselves to decisions that are no longer in our best interests."
 
Worked in quite a few plants that don't heat or cool mostly, winter and summer. That's fine I can dress very well for it. They know the gas cost and don't want to pay it.

But what happens is as they disable the system through either lack of maintenance or by intent, they also disable the plant fresh air system that is part of the HVAC, again either by lack of maintenance or by intent.

Then you get a plant with bad inside air (seen this injure and kill, before C became a thing). If you want to know which violation that is, I would start with the IMC 403.3 (IMC adopted by statute in CGS 29-252). Then ask them about the fresh air flow rate and that's when they'll say they don't want to pay the gas bill for it.

Swapping the bill from the gas company to the electric one not gonna help with that.

Advising them I could do free fresh air cooling with the fresh air flow rate (required in IMC 403.3), on most days of the year, will get much the same result.

The installed cost for the duct mounted electric strip heaters and the money to run them comes from two different budgets. And they do not talk to each other or use the same consultants.

The plant needs a DOAS. Trane makes a Horizon unit for the problem at hand.
 
electrofelon said:
Yes an example of the sunk cost fallacy in economics

"The sunk cost fallacy means that we are making decisions that are irrational and lead to suboptimal outcomes. We are focused on our past investments instead of our present and future costs and benefits, meaning that we commit ourselves to decisions that are no longer in our best interests."
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The sunk cost fallacy is only a fallacy if the costs are truly sunk. If there is any ongoing loan amortization going on, those are not sunk.
 
Imho it is still a sunk cost even if you are paying for it now. It is sunk because the money is coming out of your pocket weather you use the resource or not.

If you took out a huge loan to build a plant, then you are making that loan payment no matter what. The fiscal question is: do you pay less using this plant you already have, or do you pay less using some other energy source even if you are still making the loan payment on the plant you are not using.

Jon
 
gadfly56 said:
If there is any ongoing loan amortization going on, those are not sunk.
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Incorrect. The loan payments are a fixed cost, whether you use the resource or not. Future cost of operations in the comparison would not include those loan costs, since ceasing operations does not reduce those costs.

Cheers, Wayne
 
mshields said:
Recently, we've design two manufacturing facilities; one in PA, the other in OH, where we went with electric heat because it was so much cheaper than natural gas.

I'm trying to figure out when that happened? What caused it to happen? and what's chances that these conditions will hold steady over the long haul.

The OH facility is 96,000 square feet and they are putting in 4.5MW of electric heat. We're being told not to apply any diversity which I think is because the current exercise is to define a worst case cost. Even so, even if it were half that, it strikes me as insane

Thanks,

Mike
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heat pumps are far more efficient than gas.

also price of gas has spiked quite a bit. My NG service contract at home expired 3/mo ago, my new contract price has more than doubled. We use NG for water heater only, Elec heat pump for HVAC.
 
GeorgeB said:
Combined cycle (gas turbine with exhaust heat creating steam for a steam turbine) are in the 50% to 60% range.
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Right you are. I overlooked them.

They change the ratio somewhat, but they don't change the fact that the ratio of electricity-price:natural-gas-price is capped by the ability to generate electricity from natural gas. (in the long run, incorporating a lag time for recognition, planning, funding, construction, installation and commissioning -- you can't exactly order a combined-cycle natural-gas powerplant from HomeDepot's website and get it delivered by Friday)
 
drcampbell said:
Right you are. I overlooked them.

They change the ratio somewhat, but they don't change the fact that the ratio of electricity-price:natural-gas-price is capped by the ability to generate electricity from natural gas. (in the long run, incorporating a lag time for recognition, planning, funding, construction, installation and commissioning -- you can't exactly order a combined-cycle natural-gas powerplant from HomeDepot's website and get it delivered by Friday)
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can't really do that with any power plant other than small capacity standby type generator units.
 
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