Gas-fired power plants in Guangdong, China, are mostly shifting from baseload to peak-only operations following a policy shift, reducing running hours and potentially curbing long-term gas demand growth, Wood Mackenzie strategists said Wednesday.
Guangdong is a key indicator for China's gas market direction, as it accounts for a large share of the country's gross domestic product and gas power capacity.
Between 2020 and 2026, its gas power capacity more than doubled to 61 gigawatts from 27 GW, while solar and wind capacity grew almost eightfold to 105 GW from 14 GW, the firm noted.
"Growth in intermittent capacity has strengthened gas's role increasingly serving as a system regulator," Wood Mackenzie said, adding that "the new policy framework now formalizes this distinction."
Guangdong reformed its gas power policy in July 2025, moving plants from guaranteed operating hours to pure economic dispatch, a competitive, market-driven model.
The new rule requires plants to bid for fuel-cost recovery, while receiving higher capacity payments that cover full capital expenditures instead of partial ones.
"The policy compensates plants for availability rather than generation, reinforcing the shift to peaking roles," Wood Mackenzie said.
The firm highlighted that "shifting to peak-only dispatch will slow the growth of China's power gas demand compared to maintaining baseload operations."
Its analysis showed that gas demand could rise if spot liquefied natural gas prices drop to about $6 per million British thermal units, making coal-to-gas switching economical at coal costs of $95 per ton.
"Until then, most fleets are likely to remain primarily in peaking roles, restricting their impact on total power gas demand," Wood Mackenzie noted.