Guangdong power reforms may curb gas plant hours, slow demand growth
Wood Mackenzie says Guangdong's shift to economic dispatch could cut gas plant running hours and slow gas demand growth, though capacity payments offer new support.
Reforms to electricity dispatch rules in Guangdong, China's largest natural gas power market, are expected to reduce operating hours at gas-fired plants and slow the growth of gas consumption, consultancy Wood Mackenzie has said.
Under the previous system, gas plants in the province received guaranteed dispatch hours and an approved on-grid tariff. They were also eligible for additional subsidies when fuel costs climbed above a set threshold. The July 2025 reforms replaced those arrangements with economic dispatch, under which gas generators must bid to recover their fuel costs.
The shift is likely to translate into fewer running hours for gas-fired capacity. At the same time, the new framework introduced capacity payments that compensate gas plants for their full capital expenditure — paying them for being available rather than for the electricity they produce. The design mirrors payments already extended to coal generators.
The changes are unfolding against a rapid build-out of renewable generation in the province. Guangdong's combined solar and wind capacity expanded from 14 gigawatts in 2020 to 105 gigawatts in 2026.
Wood Mackenzie's principal analyst for Asia Pacific gas and LNG, Kai Dong, described the "Guangdong model" as a guide to how China's largest gas power market is adapting to a grid with a high share of renewables.
Gas demand could still rise if prices fall sharply, but the consultancy estimates that gas would need to drop to roughly $6 per MMBtu to compete with coal, compared with recent Asian spot prices near $30 per MMBtu.