Gas based power plants
Gas based power plants are no longer being priced out at the margin. They are being bypassed entirely. Recent scheduling patterns show that even APM-linked gas stations are absent from the merit order.
This matters because APM gas represents the cheapest category of domestic gas supply. If these units cannot find a dispatch window, LNG-linked plants fall outside the conversation altogether. For Gas based power plants, this is not a fuel-cost story but a system-design story.
Three forces are reshaping merit order dispatch. First, coal supply conditions have stabilised, reducing the need for mid-merit thermal backfill. Second, must-run renewables increasingly occupy daytime and shoulder blocks. Third, seasonal hydro is absorbing a larger share of balancing demand. Together, these forces compress the space in which gas once operated.
The traditional defence of gas was flexibility. Fast ramping and peaking capability justified keeping capacity alive even at low utilisation. That logic is now being challenged by pumped storage, which offers similar responsiveness without fuel volatility or allocation risk. As pumped storage projects reach commercial operation, Gas based power plants lose their last comparative advantage.
This shift carries financial and policy consequences. Assets built on earlier planning assumptions risk becoming stranded. Capacity payment debates that assume dispatch relevance may need rethinking. LNG infrastructure narratives tied to the power sector face diminishing justification.
For Power sector reforms, the lesson is uncomfortable but clear. The system no longer plans around gas. Gas based power plants are drifting from marginal to peripheral in grid operations, Gas Generation, Merit Order Dispatch, Pumped Hydro, Energy Markets, Grid Flexibility, Power Policy.
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