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Date: Fri, 19 Sep 2025 08:03:07 GMT
Subject: Gas to Power Weekly - 19 September - Soaring construction costs jeopardise US gas power projects; Kuwait’s RES target “unrealistic,” needs dispatchable backup capacity
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Email from Gas to Power Journal Our weekly update covering everything you need to know about Natural Gas Power Generation LEAD ARTICLE Soaring construction costs jeopardise US gas power projects The price of building new gas-fired power plants in the US has risen to $2,200–$2,500 per kilowatt of capacity, raising doubt about projects economics and freeing up more feedgas for LNG exports. At the Energy Finance Conference in San Diego, panellists warned that building a modern combined-cycle gas power plant now requires hundreds of millions in upfront investment – notably $25 million deposits to secure key equipment. LNG terminals and power stations compete for the same pool of domestic gas, driving up prices at Henry Hub and potentially causing supply bottlenecks. Yet, long lead-times for gas generation capacity and high construction costs work in favour of LNG. Development costs for US gas power plants are expected to rise 5% annually with little sign of easing. DOWNLOAD NOW << D E M A N D Power generation drives global gas demand; IGU finds   E N E R G Y M I X Germany could scale back renewables build-out in pivot to gas Developing nations need “all of the above,” including fossil fuels   P R O J E C T S H2-to-power trial succeeds at Centrica’s Brigg gas peaking plant LNG-fuelled projects restart in central Vietnam       Germany could scale back renewables build-out in pivot to gas German Chancellor Friedrich Merz has indicated the country will slow the pace of its renewable build-out due to grid access constrains which raises the role of gas generation. The mandatory H2-ready requirement for new gas power plant as been dropped as part of the government’s revised power plant strategy. Merz said that Germany might “do a little less in terms of clean energy expansion,” to curb the surge in system costs for grid expansion while relying more on fossil power sources. The ‘Energiewende’ has not be scrapped, but slowed down in scale and speed, he indicated peaking ahead of a forthcoming monitoring report on the energy transition. The Conservative-led German coalition government wants to slow the planned expansion of wind and solar power, arguing that the costs of grid expansion, storage, and renewable deployment are rising fast and need to be brought under control. Instead, the focus shifts to gas. Germany still plans to build about 20 gigawatts (GW) of gas-fired power capacity to provide backup during dark doldrums, when there is low output from renewable energy sources. To make investors forthcoming, the government scrapped its previous requirement that all new gas‐fired power plants must be “hydrogen‐ready” from the start. Instead, the plants will be built to run on gas, with the option to convert to hydrogen later – if and when the economics and infrastructure allow. Scrapping H2-ready mandate speeds up CCGT build-out Dropping the hydrogen‐ready mandate is intended to reduce upfront investment requirements and lower the cost of building new flexible combined cycle power plants. The more lenient regulation meant to make Germany’s big power producers come forward and build more capacity. Essen-based RWE does indeed plant to build two CCGT plants of around 800 MW each: one at the Weisweiler site and another at Gersteinwerk in Werne. The company stated it targets 3 GW of hydrogen-ready gas power plant capacity by 2030. E.ON is still hesitant with CEO Leonhard Birnbaum calling on the government to proceed with tenders for “the first 5 GW” of new gas-to-power capacity, before it makes a move. Industry welcomes the H2-ready rollback, but warns the requirement to later convert plants should not be forgotten. “Nobody is going to build a gas plant that is no longer economically viable in 20 years’ time,” BDEW head Kerstin Andreae commented. Steelmakers had for long cried out against hydrogen obligations. Thomas Bünger, CEO of ArcelorMittal Germany called for loosening rigid deadlines and fuel‐switching mandates, suggesting they risk making German steel uncompetitive. Katherina Reiche, the German Economy and Energy Minister, acknowledged that sufficient quantities of hydrogen will probably not be available by 2030 to immediately fuel or co-fire all new gas generating capacity. In the meantime, purely gas-fired power plant view as necessary for keeping the lights on. Enjoyed your free read? Consider a trial subscription     Follow us on social media Gas to Power Journal | 39-41 North Road | London, N79DP GB Unsubscribe | Update Profile | Constant Contact Data Notice
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<p style="margin: 0;"><span style="font-size: 16px; color: rgb(8, 40, 206); font-weight: bold;">LEAD ARTICLE</span></p>
<p style="margin: 0;"><br></p>
<p style="margin: 0;"><span style="font-size: 18px; color: rgb(128, 126, 131); font-weight: bold;">Soaring construction costs jeopardise US gas power projects </span></p>
<p style="margin: 0;"><br></p>
<p style="margin: 0;"><span style="font-weight: bold; color: rgb(128, 126, 131);">The price of building new gas-fired power plants in the US has risen to $2,200–$2,500 per kilowatt of capacity, raising doubt about projects economics and freeing up more feedgas for LNG exports. At the Energy Finance Conference in San Diego, panellists warned that building a modern combined-cycle gas power plant now requires hundreds of millions in upfront investment – notably $25 million deposits to secure key equipment. </span></p>
<p style="margin: 0;"><br></p>
<p style="margin: 0;"><span style="color: rgb(128, 126, 131);">LNG terminals and power stations compete for the same pool of domestic gas, driving up prices at Henry Hub and potentially causing supply bottlenecks. Yet, long lead-times for gas generation capacity and high construction costs work in favour of LNG. Development costs for US gas power plants are expected to rise 5% annually with little sign of easing.</span></p>
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<p style="margin: 0;"><span style="font-size: 16px; color: rgb(128, 126, 131); font-weight: bold;">D E M A N D </span></p>
<p style="margin: 0;"><br></p>
<p style="margin: 0;"><span style="font-size: 16px; color: rgb(128, 126, 131);">Power generation drives global gas demand; IGU finds</span></p>
</td> </tr> </table> <div class="spacer" style="line-height: 10px; height: 10px;"> </div> <table class="text text--padding-vertical" width="100%" border="0" cellpadding="0" cellspacing="0" style="table-layout: fixed;"> <tr> <td class="text_content-cell content-padding-horizontal" style="text-align: left; font-family: Arial,Verdana,Helvetica,sans-serif; color: #403F42; font-size: 14px; line-height: 1.2; display: block; word-wrap: break-word; padding: 10px 20px;" align="left" valign="top">
<p style="margin: 0;"><span style="font-size: 16px; color: rgb(128, 126, 131); font-weight: bold;">E N E R G Y M I X</span></p>
<p style="margin: 0;"><br></p>
<p style="margin: 0;"><span style="font-size: 16px; color: rgb(128, 126, 131);">Germany could scale back renewables build-out in pivot to gas</span></p>
<p style="margin: 0;"><br></p>
<p style="margin: 0;"><span style="font-size: 16px; color: rgb(128, 126, 131);">Developing nations need “all of the above,” </span></p>
<p style="margin: 0;"><span style="font-size: 16px; color: rgb(128, 126, 131);">including fossil fuels</span></p>
</td> </tr> </table> <div class="spacer" style="line-height: 10px; height: 10px;"> </div> <table class="text text--padding-vertical" width="100%" border="0" cellpadding="0" cellspacing="0" style="table-layout: fixed;"> <tr> <td class="text_content-cell content-padding-horizontal" style="text-align: left; font-family: Arial,Verdana,Helvetica,sans-serif; color: #403F42; font-size: 14px; line-height: 1.2; display: block; word-wrap: break-word; padding: 10px 20px;" align="left" valign="top">
<p style="margin: 0;"><span style="font-size: 16px; color: rgb(128, 126, 131); font-weight: bold;">P R O J E C T S</span></p>
<p style="margin: 0;"><br></p>
<p style="margin: 0;"><span style="font-size: 16px; color: rgb(128, 126, 131);">H2-to-power trial succeeds at Centrica’s Brigg gas peaking plant</span></p>
<p style="margin: 0;"><br></p>
<p style="margin: 0;"><span style="font-size: 16px; color: rgb(128, 126, 131);">LNG-fuelled projects restart in central Vietnam</span></p>
</td> </tr> </table> <div class="spacer" style="line-height: 10px; height: 10px;"> </div> <table class="text text--padding-vertical" width="100%" border="0" cellpadding="0" cellspacing="0" style="table-layout: fixed;"> <tr> <td class="text_content-cell content-padding-horizontal" style="text-align: left; font-family: Arial,Verdana,Helvetica,sans-serif; color: #403F42; font-size: 14px; line-height: 1.2; display: block; word-wrap: break-word; padding: 10px 20px;" align="left" valign="top"><p style="margin: 0;"><br></p></td> </tr> </table> <div class="spacer" style="line-height: 10px; height: 10px;"> </div> <table class="text text--padding-vertical" width="100%" border="0" cellpadding="0" cellspacing="0" style="table-layout: fixed;"> <tr> <td class="text_content-cell content-padding-horizontal" style="text-align: left; font-family: Arial,Verdana,Helvetica,sans-serif; color: #403F42; font-size: 14px; line-height: 1.2; display: block; word-wrap: break-word; padding: 10px 20px;" align="left" valign="top"><p style="margin: 0;"><br></p></td> </tr> </table> <div class="spacer" style="line-height: 10px; height: 10px;"> </div> <table class="text text--padding-vertical" width="100%" border="0" cellpadding="0" cellspacing="0" style="table-layout: fixed;"> <tr> <td class="text_content-cell content-padding-horizontal" style="text-align: left; font-family: Arial,Verdana,Helvetica,sans-serif; color: #403F42; font-size: 14px; line-height: 1.2; display: block; word-wrap: break-word; padding: 10px 20px;" align="left" valign="top"><p style="margin: 0;"><br></p></td> </tr> </table> </td> <td class="column column--2 scale stack" style="width: 65%;" align="center" valign="top"> <table class="text text--article text--padding-vertical" width="100%" border="0" cellpadding="0" cellspacing="0" style="table-layout: fixed;"> <tr> <td class="text_content-cell content-padding-horizontal" style="line-height: 1.2; text-align: left; font-family: Arial,Verdana,Helvetica,sans-serif; color: #403F42; font-size: 14px; display: block; word-wrap: break-word; padding: 10px 20px;" align="left" valign="top">
<p style="margin: 0;"><span style="font-size: 18px; color: rgb(128, 126, 131); font-weight: bold;">Germany could scale back renewables build-out in pivot to gas</span></p>
<p style="margin: 0;"><br></p>
<p style="margin: 0;"><span style="color: rgb(128, 126, 131); font-weight: bold;">German Chancellor Friedrich Merz has indicated the country will slow the pace of its renewable build-out due to grid access constrains which raises the role of gas generation. The mandatory H2-ready requirement for new gas power plant as been dropped as part of the government’s revised power plant strategy. </span></p>
<p style="margin: 0;"><br></p>
<p style="margin: 0;"><span style="color: rgb(128, 126, 131);">Merz said that Germany might “do a little less in terms of clean energy expansion,” to curb the surge in system costs for grid expansion while relying more on fossil power sources. The ‘Energiewende’ has not be scrapped, but slowed down in scale and speed, he indicated peaking ahead of a forthcoming monitoring report on the energy transition. </span></p>
<p style="margin: 0;"><br></p>
<p style="margin: 0;"><span style="color: rgb(128, 126, 131);">The Conservative-led German coalition government wants to slow the planned expansion of wind and solar power, arguing that the costs of grid expansion, storage, and renewable deployment are rising fast and need to be brought under control.</span></p>
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<p style="margin: 0;"><span style="color: rgb(128, 126, 131);">Instead, the focus shifts to gas. Germany still plans to build about 20 gigawatts (GW) of gas-fired power capacity to provide backup during dark doldrums, when there is low output from renewable energy sources. </span></p>
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<p style="margin: 0;"><span style="color: rgb(128, 126, 131);">To make investors forthcoming, the government scrapped its previous requirement that all new gas‐fired power plants must be “hydrogen‐ready” from the start. Instead, the plants will be built to run on gas, with the option to convert to hydrogen later – if and when the economics and infrastructure allow.</span></p>
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<p style="margin: 0;"><span style="color: rgb(128, 126, 131); font-weight: bold;">Scrapping H2-ready mandate speeds up CCGT build-out</span></p>
<p style="margin: 0;"><br></p>
<p style="margin: 0;"><span style="color: rgb(128, 126, 131);">Dropping the hydrogen‐ready mandate is intended to reduce upfront investment requirements and lower the cost of building new flexible combined cycle power plants. The more lenient regulation meant to make Germany’s big power producers come forward and build more capacity.</span></p>
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<p style="margin: 0;"><span style="color: rgb(128, 126, 131);">Essen-based RWE does indeed plant to build two CCGT plants of around 800 MW each: one at the Weisweiler site and another at Gersteinwerk in Werne. The company stated it targets 3 GW of hydrogen-ready gas power plant capacity by 2030. E.ON is still hesitant with CEO Leonhard Birnbaum calling on the government to proceed with tenders for “the first 5 GW” of new gas-to-power capacity, before it makes a move.</span></p>
<p style="margin: 0;"><span style="color: rgb(128, 126, 131);"><span class="ql-cursor"></span></span></p>
<p style="margin: 0;"><span style="color: rgb(128, 126, 131);">Industry welcomes the H2-ready rollback, but warns the requirement to later convert plants should not be forgotten. “Nobody is going to build a gas plant that is no longer economically viable in 20 years’ time,” BDEW head Kerstin Andreae commented.</span></p>
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<p style="margin: 0;"><span style="color: rgb(128, 126, 131);">Steelmakers had for long cried out against hydrogen obligations. Thomas Bünger, CEO of ArcelorMittal Germany called for loosening rigid deadlines and fuel‐switching mandates, suggesting they risk making German steel uncompetitive.</span></p>
<p style="margin: 0;"><br></p>
<p style="margin: 0;"><span style="color: rgb(128, 126, 131);">Katherina Reiche, the German Economy and Energy Minister, acknowledged that sufficient quantities of hydrogen will probably not be available by 2030 to immediately fuel or co-fire all new gas generating capacity. In the meantime, purely gas-fired power plant view as necessary for keeping the lights on. </span></p>
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