More efforts needed
Gas-fired power generation increased 4% in 2018, led by strong generation growth in the United States and China. At around 6 100 TWh, gas accounts for 23% of overall power generation. In the SDS, gas use as a flexible transition fuel increases until the late 2020s, displacing unabated coal, but gas without CCUS declines steadily thereafter. This indicator remains yellow as we don’t yet see the kind of commitments globally for CCUS with natural gas that would provide confidence of achieving an SDS trajectory by 2030.
Raimund Malischek
Lead author
Evolution of gas-fired power generation in the SDS
Gas Low-carbon Coal
2000 2753 5459 6005
2001 2907 5461 6024
2002 3109 5581 6309
2003 3270 5586 6722
2004 3513 5899 6950
2005 3702 6096 7335
2006 3912 6277 7746
2007 4220 6306 8207
2008 4376 6525 8258
2009 4423 6634 8099
2010 4822 7017 8664
2011 4883 7067 9142
2012 5086 7262 9180
2013 5027 7611 9633
2014 5159 7940 9698
2015 5519 8166 9532
2016 5781 8638 9575
2017 5855 9026 9858
2025 6810 14251 7193
2030 6830 19070 4847
2035 6255 24422 3050
2040 5358 29577 1982
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Back to Power sector | TCEP overview 🕐 Last updated Friday, May 24, 2019
Tracking progress
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.
Changes in natural gas-fired power generation by region
Change in generation World 4 United States 17 Europe -7 China 30 India 0 Southeast Asia -1
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Investment
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.
Recommended actions
Carbon pricing
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 for continued investment
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.
Innovation gaps
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.
Flexible operation of gas-fired power plants
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.
Additional resources
Acknowledgements
Keith Burnard (IEAGHG), Hans-Wilhelm Schiffer (World Energy Council)