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11 January 2022

US gas plants face deteriorating business case

Of the $50bn worth of new US gas plants in the pipeline over the next decade, 80% could be cost-effectively avoided by prioritising investments in clean energy, according to research from RMI.

By Energy Monitor Staff

The long tail of natural gas plants still proposed for construction in the US face dim economic prospects, according to new research from think tank RMI. Despite utilities and other investors planning to invest more than $50bn in new gas power plants over the next decade, an RMI study found that at least 80% of these projects could be cost-effectively avoided by prioritising investments in clean energy instead.

Analysis since 2018 has documented how ‘clean energy portfolios’ – combinations of wind, solar, energy efficiency, demand response and battery energy storage – have become increasingly economical compared with new gas plants.

The gas-fired Bergen Generating Station in Ridgefield, New Jersey, US. (Photo by Joseph Sohm via Shutterstock)

New gas plant capacity being brought online in the US has fallen every year since 2018, with 2021 expected to see the lowest level since 2010. According to RMI, more than 50% of gas plants proposed in the past two years have been cancelled prior to construction as clean energy resources have become more competitive.

Today, new gas plants make up less than 10% of new capacity in US interconnection queues, with renewables and storage dominating construction plans. “Where utilities have run modern, all-source competitive procurement processes to select the least-cost, least-risk resources to maintain grid reliability, they have overwhelmingly chosen clean energy portfolios,” concludes the report.

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