Natural Gas-Powered Electricity Production Market Set to Top USD 79 Billion by 2034, Projected at a Compound Annual Growth Rate (CAGR) of 5.6%
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The natural gas-fired electricity generation market is experiencing significant growth, particularly in the distributed natural gas-fueled generation segment. This segment, valued at approximately USD 26.9 billion in 2024, is projected to increase to around USD 66.1 billion by 2034, with a compound annual growth rate (CAGR) of 9.4% during 2025-2034[1].
North America leads the market, holding around 34.9% market share in distributed natural gas-fueled generation in 2024, with a value of USD 9.3 billion[1].
Driving this growth are several factors:
- Rising electricity demand worldwide, particularly for reliable and flexible power supplies.
- Increasing focus on energy reliability and resilience, favouring distributed generation systems close to consumption points.
- Growing concerns about carbon emissions, as natural gas-fired generation emits less CO₂ compared to coal or oil, aligning with global decarbonization efforts.
- Demand from critical power users such as data centers, hospitals, and manufacturing units needing uninterrupted power.
- Urbanization and infrastructure development pushing adoption of decentralized energy systems, valued for flexibility and cost efficiency.
- Opportunities from integrating distributed natural gas generation with renewable sources and smart grid technologies to enhance reliability and optimize performance.
- Government incentives that promote clean, efficient energy generation and support for distributed power generation[1].
The broader natural gas usage perspective also shows strong growth, with industrial and commercial natural gas distribution markets forecasted to have a CAGR of 7-8% due to energy diversification strategies, network expansions, and environmental policies[4].
While the power generation gas turbine market, a related segment, is expected to grow at a lower CAGR of around 5.7% between 2025 and 2035, the stronger growth in distributed natural gas generation indicates a market preference for localized, flexible, and cleaner natural gas-based power solutions[2].
In terms of power output, the 100-500 MW segment leads the market, holding a 42.1% share[1]. Advances in turbine technology, integration with hydrogen blends, and adoption of alternative fuels like methanol are enhancing the sustainability of the market[1].
Sweet natural gas is the leading fuel source, contributing 56.2% to total electricity generation capacity[1]. Natural gas plants can provide grid support and serve as renewable backup.
Regions like Asia-Pacific, with strong energy demand, have supported market dominance, holding a USD 19.9 billion market value in 2024[1]. The market is projected to grow at a CAGR of 5.6% from 2025 to 2034[1].
In summary, the natural gas-fired electricity generation market is projected to expand robustly over the 2025-2034 period, driven by strong demand for reliable, lower-carbon, and flexible power generation solutions. Distributed natural gas generation will play a key role in this growth, with North America remaining a leading region by market share.
[1] [Source] [2] [Source] [3] [Source] [4] [Source]
- The strong growth forecasted for the industrial and commercial natural gas distribution markets, with CAGRs of 7-8%, could potentially attract more investments from the finance sector.
- As the natural gas-fired electricity generation market grows, particularly in the distributed segment, there could be significant opportunities for the finance industry to invest in cleaner, more flexible, and reliable energy solutions within the energy sector.
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