Manufacturing constraints could limit gas power’s growth shows report

Surging electricity demand has been kind to the gas power industry, but the market could face “turbo lag” in the next 15 years due to manufacturing constraints, rising costs and continued competition from renewables.

That’s according to a new report from Wood Mackenzie, titled Turbocharged vs turbo lag: The new landscape for gas-fired power.

While the consulting firm projects around 890GW of new gas-fired generation capacity to be added globally between 2025 to 2040, several factors may limit growth, specifically in the short-term.

For one, manufacturing capacity constraints would delay new gas plant construction. Wood Mackenzie is calculating around 90% utilisation of gas turbine manufacturing capacity in 2025. US developers are experiencing long-lead times for gas turbines, discovering that 2030 or beyond is the earliest opportunity to bring new combined cycle capacity online.

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Also in the US, the report notes that skyrocketing capital costs and power market prices below the cost of new gas generation pose challenges. Capital costs for combined-cycle turbine equipment have reached all-time highs, and the report adds the implementation of reciprocal trade tariffs could push these costs even higher, potentially reaching $2,800 per kW by 2028.

In Europe, renewables will continue to dominate, but gas will remain valuable for flexibility. China leads Asia Pacific’s gas capacity growth, but it’s expected to remain marginal through 2040, WoodMac said. India continues to focus on coal and renewables, while Japan and South Korea will replace retiring gas turbines.

Wood Mackenzie said several variables will shape the future of gas-fired power in the next 15 years. The consultant notes the materialisation of data center demand, particularly in the US, remains uncertain. Recent project cancellations by major tech companies have raised questions about earlier projections. Further, the expansion of gas turbine manufacturing capacity is another consideration.

While WoodMac reports current capacity appears sufficient for projected installations through 2040, manufacturers remain cautious about long-term expansion plans and are mindful of past market crashes.

Emerging technologies like carbon capture and storage (CCUS) and hydrogen blending present both opportunities and challenges. While these technologies show promise for reducing emissions from gas power, their projected cost and commerciality remains a significant hurdle.

Originally published by Kevin Clark on power-eng.com