Global Gas Power Buildout Faces “Turbo Lag” Even as Demand Surges

September 24, 2025

• TC Energy plans to invest $8.5B in U.S. power projects over five years, betting on soaring natural gas demand from AI data centers, manufacturing, and LNG exports.
• Analysts expect natural gas to remain the only fossil fuel gaining share in major economies by 2050.
• Wood Mackenzie warns of rising costs, turbine supply constraints, and competition from cheaper renewables

Global Gas Power: Canadian energy infrastructure company, TC Energy Corp. (NYSE:TRP), has unveiled plans to invest $8.5 billion over the next five years in U.S. power projects, banking on predictions of a 45 billion cubic feet per day increase in natural gas demand to meet surging power demand.

According to TC Energy CEO François Poirier, gas-fired generation will power the ongoing AI build-out, adding that his company has a footprint in eight of the ten largest U.S. electric utilities.

“It’s all about energy–and natural gas is going to be the backbone,” Poirier said in an interview.

Poirier says favorable policies by the Trump administration will make it easier for the company to achieve its lofty goal, saying that time spent on permitting and construction could be cut in half.

The energy executive has predicted that U.S. LNG exports will double from the current 12 bcf/d to 24 bcf/d over the next 10 years.

Back in May, Poirier reaffirmed TC Energy’s capital expenditure guidance of $5.5 billion to $6 billion in the current year, and said it remains on track to place assets worth $8.5 billion into service in 2025.

TC Energy reported that its projects are tracking ~15% below budget.

TC Energy is not the only organization that has predicted robust growth in U.S. natural gas demand.

Last year, Morgan Stanley predicted that the U.S. natural gas market is entering a new growth cycle thanks to the advent of AI data centers, clean energy manufacturing and the cryptocurrencies boom.

According to the International Energy Agency (IEA) global electricity demand increased by 4.3% in 2024, up from 2.5% growth recorded in 2023.

Meanwhile, S&P Global Commodity Insights recently predicted that natural gas will be the only fossil fuel that will increase its share in the energy mix of the United States, China, and India by 2050, even as oil and coal usage decline globally.

S&P Global has projected that renewables will supply 20% of global energy by 2050, up from just 4% currently. “By 2050, gas shall be the only fossil fuel with a potential increase in the energy mix for the US, China, and India,” the report stated.

The analysts note that coal-to-gas substitution has been driving the energy transition in the United States, Europe, and Southeast Asia while India has been lagging here.

India’s energy mix remains heavily skewed towards fossil fuels, with oil and gas accounting for 77% of primary energy use while renewables contribute just 2%.

However, S&P Global has predicted that fossil fuels’ share in India’s energy mix will fall to 66% by 2050, while renewables will rise to 16%. India will mainly use natural gas as a transition fuel during this period, as a more flexible and cleaner alternative to coal.

But it’s not all tailwinds. Some warn that gas-powered generation could soon face significant headwinds due to manufacturing constraints.

According to Wood Mackenzie, the gas turbine market could face “turbo lag” from 2025-2040 due to rising costs, manufacturing constraints and competition from renewables.

WoodMac notes that global orders of gas turbines jumped 32%Y/Y in 2025, driven by projections for a big load growth from AI. electrification and hydrogen production.

However, the global data and analytics provider has warned that rising capital costs coupled with power prices below the cost of new gas generation could alter this trajectory, particularly in the United States.

High costs of imported gas are likely to remain the main challenge for Asia despite the region’s strong power demand growth, while decarbonization goals will limit growth in Europe.

“While power markets will require natural gas-fired power as part of the energy transition through 2040, gas’s role will have limits,” said David Brown, Director of Energy Transition Research at Wood Mackenzie.

“High fuel costs in some regions, rising construction costs, and continued cost declines for renewables and energy storage will constrain gas’s growth potential.”

Nevertheless, WoodMac remains bullish about natural gas power generation, predicting that the global sector will add 890 GW of new gas-fired generation capacity through 2040.

The U.S. and China are expected to lead the charge, accounting for a combined 47% of global annual additions while India, Southeast Asia and the EU will account for the rest.

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