China gas pricing uncertain

NATURAL gas prices for China’s power sector are uncertain, despite predictions that a greater focus on gas and renewables, installed capacity would see its gas power generation capacity rise from 43.8 gigawatts last year to 85.5GW by 2020, thus boosting its gas turbine installations.
China gas pricing uncertain China gas pricing uncertain China gas pricing uncertain China gas pricing uncertain China gas pricing uncertain


Anthony Barich

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, will drive this growth, GlobalData’s latest report stated.

China’s gas power generation market value stood at $US652 million ($A748.5 million) last year and GlobalData forecasts it to jump to almost $1.7 billion by 2017.

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

It added that turbines of over 200 megawatts would account for $621 million of the overall market revenue by 2017.

GlobalData's senior power analyst Sowmyavadhana Srinivasan said that while gas power generation was still at a nascent stage in China, improvements in the country’s gas infrastructure meant that it had experienced rapid growth, from 16.7GW in 2007 to 43.8GW last year, which had a positive impact on gas turbine installations.

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

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.

“The future of natural gas prices for China’s power sector is uncertain,” Srinivasan said.

“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.”

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