U.S. Gas Power Buildout Starts Strong in 2025

---

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--After several close calls and repeated warnings from reliability organizations and utility regulators about the need to build more dispatchable electric generation, developers and electric utilities have responded with a bevy of new-build, gas-fired power generation projects. As many as 29,700 megawatts (MW) of new-build, gas-fueled generating capacity could come online between January 2025 and December 2027, according to data tracked by Industrial Info Resources.

"We think it's the beginning of a surge," Britt Burt, vice president of research for the Global Electric Power Industry, said in an interview. "It's been building for several years. When we're seeing now is the tip of the iceberg--we expect to see a lot more project announcements." For more on that, see December 19, 2024, article - Gridlock on the Grid Gives Boost to Fossil Future.

Industrial Info is tracking about 160 proposed U.S. new-build, gas-fired power projects, worth $73.8 billion, that are scheduled to kick off construction starting this past January. That sum includes eight gas-fired generation projects slated to be built in Puerto Rico and Guam, which are U.S. protectorates.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for a list of all U.S. new-build, gas-fired power projects scheduled to begin construction starting in January 2025.

"We don't expect all of those proposed power projects to be built," Burt said. "But for where we are in 2025, this amount of project activity is huge. Some announced projects will be delayed or cancelled while others will be added to the list. Right now, gas-fired power project activity is very dynamic." Citing Industrial Info data, Burt said gas power plant construction kickoffs this year could reach $18.1 billion, nearly four times last year's total and double the value of projects kicking off construction in 2023.

Across the nation, electricity demand is expected to grow about 2% per year, which is "remarkable" and more than double the annual growth of recent years, he continued. Plans to build new data centers, artificial intelligence (AI) facilities, bitcoin mines and other industrial projects are among the factors driving the growth.

"Over the last year or so, there has been a consensus that the U.S. needs new baseload power, and that means gas," Burt commented. "Renewables are great, and they're not going to go away, but they're not well suited to meet a significant amount of new electric demand, which requires highly reliable power 24 hours a day, seven days a week."

"Solar panels don't generate a lot of electricity when they are covered in snow, or at night, and wind generation can't operate optimally when there's a buildup of ice on the turbines, to say nothing of when the wind isn't blowing," Burt said.

For more on reliability organizations' urging the construction of new dispatchable generation or transmission, see: January 13, 2025, article - PJM Pushes for More Investment in T&D as Demand Skyrockets; December 2, 2024, article - New-build Gas Generation Can Head Off Projected Electric Generation Shortfall; October 15, 2024, article - MISO Board to Consider 24 Transmission Projects Costing Over $20 Billion; and October 4, 2024, article - Texas Public Utilities Commission OKs Permian Reliability Plan.

According to Industrial Info's GMI platform, the five states with the greatest dollar value of new-build, gas-fired generation projects scheduled to kick off in January 2025 and beyond are Texas, Louisiana, North Dakota, Georgia and West Virginia.

Click on the image at right to see a bar chart of the 10 states with the largest dollar-value of new-build gas generation scheduled to begin construction in January 2025 and beyond.

On the other side of the coin, the states with the lowest dollar value of new-build gas power plants are New York, Alabama, Iowa, New Jersey and Arkansas.

Click on the image at right to see a bar chart of the 10 states with the lowest dollar-value of new-build gas generation scheduled to begin construction in January 2025 and beyond.

The buildout is generalized across the U.S. Industrial Info is tracking new-build gas generation projects in 41 states. States that are not planning to add new gas-fired power plants include Connecticut, Hawaii, Idaho, New Hampshire, Oregon, Rhode Island, Utah and Vermont.

Burt said President Donald Trump's drive for "energy dominance" provides a bit of a tailwind for project development, but the current gas buildout was under way long before Trump was inaugurated last month. "The president's goal is to revive the domestic energy industry. That, coupled with strong electric demand growth and the retirement of so many baseload generators over the past decade or so, is driving the buildout."

Even those states that turned against gas power in recent years, such as California and Arizona, appear to have rethought their stance, as about 15 proposed new-build gas power plant projects are being developed for those two states.

The traditional Achilles heel of gas-fired generation--the price of natural gas--could become a headwind, acknowledged Burt, who has analyzed the power industry for more than three decades. The price of gas could go up if all the planned liquefied natural gas (LNG) terminals are built and there was a prolonged period of cold weather, he allowed. But gas producers have been able to keep production growth ahead of demand growth, which is one reason why gas prices have been relatively low in recent years.

In its February Short-Term Energy Outlook, the U.S. Energy Information Administration (EIA) reported that spot prices for gas at Henry Hub, Louisiana, averaged $2.50 per million British thermal units (MMBtu) in 2023 and $2.28 in 2024. Prices are expected to shoot up in 2025 and 2026, to an average of $3.93 per MMBtu this year and $4.32 next year, the agency said.

U.S. gas production is expected to rise from about 113 billion cubic feet per day (Bcf/d), in 2024 to approximately 118 Bcf/d in 2026, projected the February STEO. Gas consumption is expected to be flat at about 90 Bcf/d for the 2024-2026 period, added the report. Even allowing for increased LNG exports, to an expected level of 16.2 Bcf/d in 2026 from 12 Bcf/d in 2024, the gas market appears to be oversupplied for the next two years.

"LNG exports are expected to increase but that probably will not have a meaningful effect on the cost effectiveness of new-build natural gas generation," Burt said. "If Henry Hub gas prices get to $6 or above, that would create some problems for some projects."

Gas at Henry Hub cost less than $3.50 per MMBtu for the first half of February, but a brutal cold snap drove up prices to about $4.25 per MMBtu in the last week or so. "Electric generators pay somewhat more than the Henry Hub price, but the industry can live with gas priced between $3.50 and $4.50 per MMBtu," Burt said.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).