South China leads the domestic natural gas power generation market with 39% of the total installed capacity, driven by Guangdong Province's dense concentration of gas-fired power projects. Factors such as robust economic development, supportive policies, and reliable gas supply shape the region’s project distribution. These elements are also critical in determining the potential for future expansion in South China's natural gas power sector.

As a vital bridge between natural gas and electricity, the gas power generation market exhibits unique dynamics, shaped by regional power demand, energy structures, and gas supply capacity. According to SCI, South China leads with approximately 55.78 GW of operational gas-fired power capacity, accounting for 39% of the national total and exceeding East China by 5.06 percentage points. Notably, since 2018, the region's installed capacity for natural gas power has maintained an annual growth rate exceeding 10%.

SCI reports that Guangdong dominates South China's gas-fired power market, accounting for about 91.05% of the region's total capacity, significantly surpassing Hainan (7.61%) and Guangxi (1.34%). As a result, the analysis emphasizes Guangdong while providing insights into the smaller markets of Hainan and Guangxi.

Ⅰ. Economic Growth Fuels Power Demand, Highlighting Gas Power’s Role in Peak-Shaving

Strong economic growth and a large population have fueled significant power consumption in South China, driving the expansion of natural gas power projects. In 2023, Guangdong Province, with a GDP of approximately ￥13.57 trillion and a population of 127.06 million, led the nation in both categories. This has contributed to the province’s electricity consumption reaching 850.2 billion kWh/a, making it the only province in China to surpass 800 billion kWh/a.

In Guangdong Province, cities like Dongguan, Shenzhen, Guangzhou, and Huizhou, known for their rapid economic growth, are key areas for natural gas power generation projects. The top cities for GDP and gas-fired capacity align by 80%. During summer, when electricity demand surges due to high temperatures, natural gas power generation plays an essential role in managing peak demand and ensuring a reliable energy supply.

Ⅱ. Clean Energy Advantages and Policy Support as Key Drivers

For years, government policies aimed at controlling energy consumption and reducing carbon emissions have significantly propelled the natural gas power market in South China. Starting with the 13th Five-Year Plan, Guangdong Province emphasized optimizing its energy structure and strict coal consumption control, underscoring natural gas's crucial role. By 2020, the gas-fired power capacity was set to double from 2015 levels. The province's proactive approach has led to rapid growth, with a target of 55 GW in gas-fired power by 2025, making natural gas a pivotal solution in meeting energy needs and transitioning to low-carbon energy sources.

Similarly, both Hainan and Guangxi have developed plans for natural gas power projects. Hainan’s "14th Five-Year Energy Conservation and Emission Reduction Plan" advocates for "coal-to-gas" initiatives, while Guangxi’s "14th Five-Year Energy Development Plan" highlights the expansion of clean energy sources, including natural gas, to ensure energy security.

Therefore, given its clean, low-carbon benefits and peak-shaving capabilities, provinces in South China have consistently embraced encouraging, supportive, and proactive policies for the development of natural gas power generation.

Ⅲ. Gas Supply Capability is Essential to Shape Gas Power Project Layout

A stable natural gas supply is critical for the growth of the gas power market, especially in South China, where many gas-fired power projects depend on a "gas supply-based" model. Insufficient gas supply limits the operational hours of power units and jeopardizes the region's stable electricity supply. Thus, the availability of gas directly impacts the scale and reliability of gas power generation.

Natural gas power projects in South China are typically located near gas sources, especially in regions like Guangxi and Hainan with smaller markets. In Guangdong, cities such as Dongguan, Shenzhen, Zhuhai, Huizhou, and Jieyang are prime sites for gas power projects due to their proximity to LNG receiving terminals. Similarly, over 77% of Hainan's gas power capacity and more than 72% of Guangxi’s capacity are concentrated near these terminals.

Ⅳ. Outlook for the Future

Heading into Q4 of 2024, several gas-fired cogeneration projects in South China have seen significant advancements. Notable developments include China-cdt Guangdong Huizhou Boluo Gas Combined Heat and Power Project, Guangdong Energy Jieyang Da Nanhai Natural Gas Power Cogeneration Project, Guangzhou Zengcheng Wanglong Gas Power Replacement Project, and Chnenergy Guangdong Qingyuan Shijiao Gas Power Project. Additionally, the completion of CEIC Huizhou Phase II Gas Cogeneration Project and Shenzhen East Power Plant Phase II Project further supports growth in the region's natural gas power sector.

Looking ahead, South China's natural gas power sector has substantial growth potential, with Guangdong remaining a key focus for development. In addition to its strong economic base, ongoing efforts to transition to low-carbon energy and enhanced natural gas supply capabilities are expected to unlock further opportunities in the local gas power market.

In recent years, regions including South China have introduced carbon peak implementation plans tailored to local conditions. This sets the stage for the rollout of more green energy transition measures. In the power sector, the growth potential for clean energy generation is clear. Alongside new energy sources, natural gas power, which plays a key role in transitional and peak-shaving functions, remains an area to watch closely.

According to SCI data, South China is set to complete 11 LNG receiving terminals in the coming years, with Guangdong leading the expansion by adding 37 Mtpa in receiving capacity. This growth will bolster LNG imports by enhancing gas supply infrastructure. As a result, demand from various sectors, including power generation, is expected to rise, supporting the efficient utilization of increased natural gas resources.