Natural Gas Plants Selling at Half the Cost of New Construction, Report Finds

Existing gas-fired power plants are selling for about half the cost of building new CCGTs, according to a new Enverus report examining the growing cost gap.

(P&GJ) — Existing combined-cycle gas turbine (CCGT) power plants are selling for roughly half the cost of building new facilities, creating a strong financial incentive for buyers to acquire operating assets instead of developing new merchant generation, according to a new report from Enverus Intelligence® Research (EIR).

The report analyzed 76 CCGT projects with publicly disclosed capital costs and commercial operation dates between 2014 and 2033. According to Enverus' report, the average cost of constructing new gas-fired generation has climbed from about $0.9 million per MW for plants entering service before 2023 to approximately $2.0 million per MW for projects expected online after 2027.

During the same period, acquisition values for operating gas-fired power plants also increased, rising from roughly $0.5 million per MW before 2025 to approximately $1.0 million per MW last year.

Even with higher acquisition prices, Enverus found buyers are still paying only about 50 cents on the dollar compared with replacement costs, creating what the firm describes as a replacement-cost gap of roughly $1 million per MW.

According to Enverus' report, that pricing gap helps explain why investors continue to favor acquisitions over greenfield merchant projects while wholesale electricity and capacity prices remain below the levels needed to support new construction.

"Newbuild CCGT costs have moved high enough that the economics increasingly favor buying existing, grid-connected capacity over building new merchant plants," said Brynna Foley, report author and Enverus Intelligence Research analyst.

"That replacement-cost wedge is now a central factor in power-sector capital allocation, supporting incumbent asset values while limiting the near-term on-grid supply response."

The report also examined the market conditions required to justify new construction. Enverus estimates greenfield CCGT projects costing about $2.2 million per MW would require capacity payments of roughly $500 per MW-day in the PJM Interconnection market or power purchase agreements of approximately $70/MWh in ERCOT to be economically financeable.

Enverus views the widening replacement-cost gap as providing a structural valuation floor for existing independent power producers while supporting stronger capacity and scarcity pricing. However, the report notes that lower turbine costs or slower-than-expected growth in electricity demand from data centers could reduce that advantage over time.

Key Findings

• New CCGT construction costs have increased from roughly $0.9 million/MW before 2023 to approximately $2.0 million/MW for projects entering service after 2027.
• Acquisition multiples for operating gas-fired plants have doubled from about $0.5 million/MW before 2025 to roughly $1.0 million/MW last year.
• Existing gas-fired power plants are changing hands at about half the replacement cost of new facilities.
• New merchant CCGTs require significantly higher power or capacity prices to support financing under current market conditions.