Peaker plants are the emergency backup generators of the grid. They sit idle most of the year and start up during peak demand or grid stress. This guide covers how they work, why they still exist, and how batteries are replacing them.
What peaker plants actually are
Peaking power plants (peakers) are generators designed to run only during high demand periods, typically 5 to 15 percent of the year. They start up quickly, run at high cost per MWh, then shut down when demand falls. Base load plants run continuously; peakers run only when needed.
Types of peaker plants
| Type | Notes |
|---|---|
| Simple cycle gas turbine (SCGT) | Most common. Fast start. Aircraft derivative design typical. |
| Reciprocating engine (RICE) | Large diesel or gas engines. Very fast start. |
| Oil fired | Legacy plants; declining. |
| Combined cycle in peaking mode | Larger plants running less efficiently. |
| Hydro (pumped or reservoir) | Very fast response; environmental depends on site. |
| Battery storage | Increasingly displacing gas peakers. |
Why peakers exist
| Reason | Notes |
|---|---|
| Peak demand | Summer AC or winter heating peaks |
| Grid contingencies | Backup when other plants trip |
| Ramping | Solar sunset rapid load pick up |
| Ancillary services | Frequency response, reserves |
| Cold snap resilience | Extreme weather events |
| Local reliability | Transmission constrained areas |
Operating characteristics
Peaker economics
Costs
| Cost element | Notes |
|---|---|
| Capital cost | USD 700 to 1,500 per kW |
| Fuel cost | Natural gas mostly; high volatility |
| Efficiency | 25 to 40 percent (lower than baseload) |
| Cost per MWh generated | USD 150 to 400 (very high vs baseload) |
| Emissions per MWh | Higher than combined cycle gas |
Batteries replacing peakers
Grid batteries with 2 to 4 hour duration are increasingly cheaper than new gas peakers on a lifecycle basis. Faster response, no emissions, and lower operating cost. California, Texas, and other markets seeing rapid battery deployment displacing peaker retirements.
Notable peaker retirements
- Ravenswood NYC: battery replacement in progress.
- Multiple California retirements.
- Astoria peaker retirement replaced by battery.
- PJM peaker retirements continuing.
Environmental impact
Reliability role
Peakers provide operating reserves for grid contingencies. When a generation unit trips, reserves must respond within seconds to minutes. Peakers and batteries both provide this service.
Cold weather reliability
Texas 2021 winter storm exposed reliability failures when peakers themselves froze. Weatherisation and fuel supply reliability critical. Batteries can complement but not fully replace fuel based capacity during extended cold.
Solar sunset ramping
Solar generation falls rapidly at sunset while evening demand rises. Steep ramp requires flexible generation. Batteries increasingly filling this role; peakers historically dominant. See our companion article on the duck curve.
Capacity markets
Capacity markets in PJM, MISO, NYISO, ISO NE, and others pay generators for being available. Peakers rely on capacity payments for revenue. Market design changes significantly affect peaker economics.
Where peakers are going
- Continued retirement in high battery deployment markets.
- New peaker construction rare.
- Existing peakers continuing operation on capacity payments.
- Cold weather reliability role continuing.
- Long duration storage may eventually replace multi day peakers.
- Hydrogen fired peakers emerging.
Hydrogen peakers
Some peakers being designed for hydrogen or hydrogen blend fuel. Enables clean peaking capacity. Currently pilot scale. See our companion article on green hydrogen.
Global peaker landscape
Peakers most common in developed markets with high peaks. China rapid growth adds significant peaker demand. Europe has significant peaker fleet. Emerging markets often use diesel generators as informal peaking.
Local issues
Environmental justice groups increasingly opposing peaker permits. Communities in New York City, California, and elsewhere pushing for battery replacement of urban peakers. Growing consideration in regulatory decisions.
Frequently asked questions
What is a peaker?
Power plant that runs only during peak demand or grid stress.
How often do peakers run?
5 to 15 percent of the year typically.
Are peakers profitable?
Mostly from capacity payments not energy sales.
Are batteries replacing them?
Yes in high storage markets.
Do peakers pollute?
More per MWh than baseload. Concentrated in urban areas.
What is a capacity market?
Market paying generators for being available for reliability.
Are hydrogen peakers coming?
Emerging technology. Pilot scale.
Why not just batteries?
Battery duration limits (2 to 4 hours typical). Extended shortages need generation.
Do peakers cause blackouts?
They prevent them by providing reserves. Failures can contribute to blackouts.
Where can I read more?
PJM, NYISO, ERCOT market monitors.
Summary
Peaker plants run only during peak demand or grid stress. Simple cycle gas turbines dominate. They earn revenue from capacity payments and ancillary services rather than energy sales. Batteries increasingly displacing gas peakers on cost and performance. Cold weather resilience and multi day shortage response still favour fuel based capacity. Hydrogen peakers emerging. Environmental justice concerns driving urban peaker retirement.
Next reading
- The duck curve
- How grid batteries work
- How the electric grid works
- Browse the UtilityRadar directory
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