IEA (2019), "Tracking Power", IEA, Paris https://www.iea.org/reports/tracking-power-2019
Gas-fired generation increased by 4% in 2018, mainly as a result of a 17% increase in the United States. At around 6 100 TWh, it accounts for 23% of overall power generation.
Gas growth was also significant in China (30%), but it started from a much lower base. In Europe, gas in power generation decreased by 7% because of strong renewables generation, whereas it rose by 28% in Korea, displacing nuclear generation.
Gas generation growth remains well above the overall Sustainable Development Scenario (SDS) trajectory, which shows gas generation peaking in the late 2020s and declining steadily thereafter. Gas-based generation emits less CO2 than coal-fired generation, so when it displaces coal (as in the United States), it can deliver immediate emissions reductions. In the SDS, as the lower-carbon alternative to gas, renewables lead global generation growth at the expense of gas up to 2030.
While there are no large-scale CCUS projects at gas-fired plants in operation today, the SDS envisions 35 GW by 2030.
After rising to a decade high in 2012, spending on gas-fired power slowed in 2018, notably in the Middle East and North Africa region and in the United States.
Final investment decisions (FIDs) for gas-fired power dropped for the third consecutive year, by nearly 15%, though remained twice as high as those for coal.
The largest declines in gas FIDs were in the Middle East and North Africa region (-50%), where there is excess capacity in the power system, and the United States (-30%). In contrast, FIDs grew in China by 70%, and for the first time more gas-fired power capacity was sanctioned than that of coal.
The competitiveness of natural gas relative to coal in daily electricity system operations is highly dependent on regional market conditions, particularly fuel prices. However, growth prospects for gas are affected not only by the competitiveness of gas prices, but also by recognition of the local air pollution and climate benefits of gas over coal.
The introduction of carbon taxes and regulation of plant emissions could encourage coal-to-gas switching.
Further electricity market mechanisms are also required that recognise the potential benefits of natural gas-fired power – i.e. that it is a lower-carbon alternative to coal-fired generation, and that its operational flexibility can help integrate variable renewables into the energy system.
Gas supply security is critical to ensure that investments continue and that gas can be deployed at the level set out in the SDS. The IEA will therefore continue to monitor global gas markets, assess supply security and provide up-to-date recommendations to increase gas market efficiency.
Improving flexibility and increasing full- and part-load efficiency will continue to be research priorities for gas-fired power generation.
Generator flexibility is particularly important to integrate growing shares of variable renewables into the grid. Boosting flexibility and encouraging its use requires that power plant technology be improved, as well as system operations, market design, the granularity of pricing and access to revenue streams for system services.
With ample, affordable gas becoming available in certain regions and countries (for instance the United States), full-load efficiency remains an important plant parameter.
RD&D should also be directed towards CCUS for gas-fired power generation. Like unabated coal, unabated gas is likely to be too carbon-intensive to reach ambitious climate targets beyond 2040.
Existing gas power capacity is not always optimised for the flexibility requirements of systems with higher shares of variable renewables. Growing shares of renewables in the power system challenges conventional operational practices of these plants.
Keith Burnard (IEAGHG), Hans-Wilhelm Schiffer (World Energy Council)