Natural Gas Power Plant Applications Surged in 2024

Data centers and load growth were a throughline for 2024 power markets. The year saw a continuation of the industry's reckoning with a change from flat or declining demand to seemingly uncapped growth. ERCOT's load forecasts encapsulate the frenzy around revising load estimates upward, with the ISO calling for its load to essentially double by 2030. While current demand estimates will undoubtedly be revised, let's look at how the gird operators around the country expect to use their predominant fuel-natural gas-to meet growing demand by reviewing the proposals made for each of the country's generation interconnection queues.

We can start with the current position of natural gas in the U.S. market. While natural gas serves as the marginal fuel for the country (increasing generation when demand is high and decreasing when demand wanes), the degree to which it needs to fluctuate is dependent on the region. In the Midwest, Texas, and the West, where wind and solar generation are prevalent, gas generation steps in when wind generation underperforms and solar generation declines. In contrast, in the eastern portion of the country, where renewables contribute less to the overall mix, gas generation responds more to changing demand levels.

In 2024, natural gas plants across the country likely increased their generation compared to 2023, as gas generation hit record levels with an approximately 8% rise over the previous year. The map below shows more than 1,200 natural gas plants-70% of the U.S. fleet-that saw increased year-over-year generation compared to 2023.

Looking forward, we can now turn to the generation interconnection queues. If someone wants to build a power plant connecting to the grid, they need to submit an application into the appropriate ISO or utility queue. The vast majority of capacity that enters the queue never gets built or is duplicative. There are many reasons for this, but interconnection queues still point to larger trends in the market and are a leading indicator of new capacity coming to the market. The following chart shows new applications into interconnection queues across the country, and our interactive and data feed power offerings provide a clear vision of global capacity buildout going forward.

There are a couple of striking trends to note here. First, storage-which is predominantly lithium-ion battery storage-took the top spot for the most capacity proposed. Inflation Reduction Act tax credits, along with the continuing decline of project costs, helped push applications higher. ERCOT, CAISO, and NYISO were the greatest contributors to storage applications.

Second, applications for gas-fired power plants more than doubled compared to the previous year. So much so that they outpaced new wind farm applications. This shows that ISOs and utilities will be increasingly turning towards natural gas generation in the face of growing demand, with some of them having made structural changes to encourage reliability. Which regions are we seeing this happen in? The following chart shows a breakdown of 2023 and 2024 natural gas generation applications by ISO.

Keep in mind that queues can overstate potential buildout, as applicants may submit multiple applications for the same facility. However, we are observing a trend of increased applications led by the Tennessee Valley Authority (TVA) and Southern Company (SOCO). Each region has its own unique factors at play. For example, TVA's new gas plants are largely driven by commitments to retire its coal fleet, while Southern Company has significantly revised its load forecasts to meet expected data-center demand.

Though natural gas-fired generation can dispatch when needed, versus being at the whims of the sun and wind, it still requires access to a supply of gas, and challenges related to midstream infrastructure-namely, natural gas pipelines-have long plagued the natural gas industry. TVA is currently facing these challenges with the recent delay in permits for a critical natural gas supply lateral.

So, while the rising interest in natural gas generation reflects a pragmatic response to growing energy demands and grid reliability needs, it is not absent challenges. Gas generation will be a big part of solving for demand growth going forward, though problems may remain in getting gas where it needs to be. For a complete list of proposed natural gas pipeline projects, including their capacities and expected in-service dates, see our up-to-date dataset.

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