Gas-fired power plants in China's Guangdong province are increasingly shifting from baseload generation to peaking roles as the region's renewables capacity expands, according to a report by Wood Mackenzie.
Analysts expect the province's gas-fired generation capacity to more than double as it helps balance intermittent renewable generation, while coal and nuclear capacity expand more modestly. In 2025, gas and LNG demand stood at 41 billion cubic meters and 18 million metric tons, respectively, with the power sector accounting for 43% of the demand.
Tuesday's report also highlighted the province's new power policy unveiled in 2025, which replaced guaranteed operating hours with pure dispatch, meaning plants are no longer assured a certain amount of running time and instead compete based on economics.
Under the new framework, plants bid to recover fuel costs, with the system-wide weighted average cost of gas, or WACOG, capped at $11.60 per million British thermal units. Capacity payments increased to a tiered $24 to $56 per kilowatt per year, covering full capital expenditure.
As a result, Wood Mackenzie analysts said that the shift toward peak-hour operation reduces overall fleet utilization, creating a structural downside for gas demand from the power sector. However, declining spot LNG prices could provide upside by allowing gas-fired plants to capture more operating hours by displacing less-efficient coal units.