Guotai Haitong Securities Co., Ltd. has released a research report reiterating a bullish stance on the global energy supercycle over the next 5-10 years.
The firm notes that global electricity demand is undergoing a significant transformation, characterized by accelerating growth and structural shifts, driven by AI development and increased residential power consumption due to global warming.
The report expresses optimism regarding baseload power sources—namely natural gas, coal, and nuclear energy—due to their critical role in enhancing grid stability and their better alignment with emerging electricity demand patterns.
This is expected to lead to sustained and stable demand growth, potentially triggering a global reassessment of their market value.
Key Points from the Report
Global electricity demand is entering a new phase where the pricing anchor is shifting from the economic cycle to the power system itself.
The structural growth rate of global electricity demand is rising and becoming less sensitive to macroeconomic fluctuations, with AI data centers, industrial electrification, and climate change now serving as core drivers of new demand.
Consequently, the global energy system is transitioning into a new cycle dominated by electricity demand, and the marginal drivers of traditional energy prices are gradually shifting from the "economic cycle" to "peak power demand and system reliability."
As the structure of electricity demand evolves, the limitations of renewable energy are becoming more apparent, while the importance of baseload power within the power system is growing substantially, which may lead to a market-wide value reassessment.
Natural Gas as the Primary Dispatchable Power Source
Natural gas is seen as the first marginal dispatchable power source for global electricity expansion.
As AI data centers, advanced manufacturing, residential cooling, and renewable energy volatility increase the power system's need for stable output, incremental natural gas demand is increasingly concentrated in the power sector, with its reliance on the macroeconomic cycle and crude oil prices continuing to decline.
Simultaneously, with global gas turbine orders growing rapidly and delivery cycles lengthening, natural gas is becoming the preferred choice for adding new reliable capacity.
On the supply-demand front, while a concentrated release of new global LNG capacity from 2026 to 2030 will improve supply, the firm anticipates that factors such as geopolitics and the pace of new project commissioning will lead to a limited, phased easing of the global LNG market post-2028, rather than a prolonged, deep surplus.
The report forecasts that US natural gas price benchmarks will rise from their 2024 lows, while European TTF and Asian JKM prices may decline slowly with new supply, though the drop will be less than linear market expectations, with price volatility from seasonal and geopolitical disruptions actually increasing.
Reassessment of Coal Assets
Coal-fired power assets are viewed as the second layer of reliable capacity for the global power system.
This reassessment does not signal a return to large-scale, new coal plant construction globally.
Instead, given the long construction cycles for nuclear power, supply constraints on gas turbine equipment, and rising LNG prices and geopolitical risks, the world's vast existing fleet of coal-fired units represents the most readily available stable power source that can be called upon over the next three to five years.
Economically, clear fuel switching from gas to coal is already evident in the US in 2025, indicating that the operational economics of natural gas and coal have temporarily crossed a switching threshold.
Globally, in most markets without high carbon price constraints, existing coal power retains a significant fuel cost advantage over imported natural gas for power generation.
Furthermore, energy security concerns, highlighted by potential US-Iran conflicts in 2026, underscore the high sensitivity of LNG supply to liquefaction facilities, critical shipping lanes, and geopolitics.
Coal benefits from diversified supply sources, multiple transport routes, and the ability to maintain long-term fuel inventories, making its energy security value increasingly prominent.
Coal power is thus being re-evaluated from an asset slated for phase-out under decarbonization frameworks to an indispensable source of reliable capacity and a fuel security "ballast" within the global power system, potentially leading to a systematic reassessment of its asset duration, utilization rates, and valuation framework.
Risk Factors
The report highlights risks including geopolitical conflicts and a potential downturn in the global macroeconomic environment.
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