Heat Rate

The average U.S. coal plant consumed about 10,300 BTU to produce one kWh of electricity in 2023. The average combined-cycle gas plant: about 7,500 BTU/kWh (tested NGCC heat rate). Those numbers determine fuel costs, and fuel costs determine which plants run and which sit idle.

Heat rate is the thermal energy input (BTU or kJ) required per unit of electrical output (kWh). It is the inverse of thermal efficiency: heat rate = 3,412 / efficiency, because one kWh equals 3,412 BTU. Lower heat rate means higher efficiency means lower fuel cost per kilowatt-hour.

Convert heat rate to efficiency. CCGT at 7,500 BTU/kWh: efficiency = 3,412 / 7,500 = 45%. Coal at 10,300 BTU/kWh: efficiency = 3,412 / 10,300 = 33%.

Calculate fuel cost per MWh. Gas at $3.00/MMBtu with a heat rate of 7,500: fuel cost = 7.5 x $3.00 = $22.50/MWh. Coal at $2.50/MMBtu with a heat rate of 10,300: fuel cost = 10.3 x $2.50 = $25.75/MWh.

The gas fuel is more expensive per BTU ($3.00 vs. $2.50). Why is the gas plant's fuel cost per MWh still lower?

Efficiency compensates for fuel price. The CCGT's superior heat rate (fewer BTUs per kWh) more than offsets the higher fuel price. This arithmetic is how efficient gas plants displaced less-efficient coal across U.S. power markets in the 2010s.

Heat rate is the operational bridge between thermodynamics and electricity markets: it translates a physics metric (efficiency) into a dollar figure that determines dispatch order.

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