The power generation market comprises companies involved in electricity generation using sources such as coal, natural gas, nuclear power, hydroelectricity, solar power, and wind power. Power generation through renewable sources like solar and wind has significant advantages over fossil fuels as they are sustainable and reduce carbon footprint. The increasing need for clean energy and government initiatives to promote renewable power sources are driving significant investment in solar and wind farms globally.
The power generation market is estimated to be valued at USD 2.1 Tn in 2024 and is expected to reach USD 3.61 Tn by 2031. It is projected to grow at a compound annual growth rate (CAGR) of 8.05% from 2024 to 2031.
Key Takeaways
Key players operating in the power generation market are General Electric, Duke Energy, Southern Company, Exelon, Engie, Iberdrola and NextEra Energy. Key players related content comprises key players related content (Key players operating in the power generation are General Electric, Duke Energy, Southern Company, Exelon, Engie, Iberdrola and NextEra Energy.)
Growing environmental concerns and stringent regulations targeting fossil fuel-based power plants have increased Power Generation Market Demand for renewable energy sources. Developing nations in Asia and Africa are investing heavily in solar and wind projects to meet the rising electricity needs of their population in a sustainable manner.
Many power companies are expanding their renewable energy capacity globally to take advantage of countries aiming to reduce carbon footprint and dependence on imported fossil fuels. Nations like China, US, India and European countries have set ambitious targets for installation of clean power plants which will drive opportunities for both domestic and international players.
Market key trends
Solar and wind power are increasingly becoming cheaper than fossil fuel-based electricity in many regions driven by technological advancements and economies of scale. According to the International Renewable Energy Agency, the cost of generating power from utility-scale solar PV and onshore wind has declined by up to 85% and 55% respectively over the past decade. This is expected to accelerate the energy transition worldwide in the coming years.
Porter's Analysis
Threat of new entrants: Low capital requirements act as a barrier for new players to enter the market. Existing players have an advantage in terms of established supply chains and brand recognition.
Bargaining power of buyers: Buyers have moderate to high bargaining power due to the availability of substitutes. However, switching costs are involved when shifting to alternate power sources.
Bargaining power of suppliers: Fuel suppliers have moderate bargaining power due to the availability of alternative fuel sources. However, capital-intensive nature of equipment manufacturing results in buyers having less bargaining power over equipment manufacturers.
Threat of new substitutes: Threat is moderate as alternate energy sources like solar, wind, and hydro are increasingly being adopted, especially for decentralized power supply. However, existing infrastructure remains dependent on conventional sources.
Competitive rivalry: Intense competition exists among key players to increase market share. Players compete on the basis of cost, quality, generation efficiency, and environmental standards compliance.
In terms of value, the Asia Pacific region currently holds the largest share of the global power generation market. China, India, and other developing Asian countries are witnessing significant demand growth due to industrialization and infrastructure development. Africa is projected to be the fastest growing regional market during the forecast period. Rapid infrastructure development and government initiatives to increase electrification rates across many African countries will drive the power generation needs. Factors like increasing economic activities, urbanization and rising living standards are expected to augment demand.
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