Here's why China's gas power generation could exceed 85 gigawatts by 2020

Renewable installed capacity and gas are involved.

With an increasing focus on renewable installed capacity and gas, China’s gas power generation capacity will rise from 43.8 Gigawatts (GW) in 2013 to 85.5 GW by 2020, subsequently boosting gas turbine installations in the country.

According to a release from GlobalData, the company’s latest report states that this growth will be driven by China’s need to adopt cleaner fuels for power generation and reduce its reliance on coal, which accounts for 62% of the country’s total installed capacity.

China’s gas power generation market value stood at $652 million in 2013 and is forecast to jump to almost $1.7 billion by 2017.

Increased infrastructure investments, expansion in the country’s distributed power generation market, and favorable policies supporting gas power generation will also allow the gas turbine market to grow in this period.

Turbines of over 200 Megawatts (MW) will account for $621 million of the overall market revenue by 2017.

Here’s more from GlobalData:

Sowmyavadhana Srinivasan, GlobalData's Senior Analyst covering Power, says: “While gas power generation is still at a nascent stage in China, improvements in the country’s gas infrastructure mean that it has experienced rapid growth, from 16.7 GW in 2007 to 43.8 GW in 2013, leading to a positive impact on gas turbine installations.

“Rising electricity demand will also drive the market, with over 35 GW of capacity coming online between 2014 and 2020, making China a major global player. Gas turbines of over 200 Megawatts (MW) will account for approximately 49% of capacity additions during this period, followed by 30 MW to 120-MW turbines with a share of 35%.”

However, GlobalData believes that a potential rise in China’s natural gas prices could pose a challenge to further growth in the country’s gas power generation capacity and consequently its turbine market for thermal power.

Srinivasan explains: “The future of natural gas prices for China’s power sector is uncertain. The country relied heavily on natural gas imports to meet domestic demand during 2006 to 2013, and increasing dependence could force the Chinese government to align domestic gas prices with international standards.

“Such an increase could adversely affect utilities’ profit margins, as electricity prices are also regulated by the government, meaning that fuel cost rises cannot be passed directly to customers.”