Fossil Fuel Power Generation
Brief Excerpt from Industry Overview Chapter:
Companies in this industry operate electric power generation facilities that produce electrical energy from fossil fuels. Major companies include American Electric Power, Duke Energy, and Southern Company (all based in the US); along with China Power, NTPC (India), SSE (UK), and Tokyo Electric Power Company (Japan).
Demand is driven by commercial, government, and residential needs for electrical power, which depend mainly on economic activity and population growth. Profitability is determined by government regulations and fuel costs. Large companies have an advantage in negotiating fuel contracts and being able to pass the costs of implementing government regulations directly to consumers. Small companies can compete effectively by exploiting market niches, such as offering green power in regulated markets. The US industry is highly concentrated: the 50 largest companies account for about 85% of revenue.
PRODUCTS, OPERATIONS & TECHNOLOGY
The primary product of the industry is alternating current (AC) electrical power. Electricity is produced by generators that convert mechanical energy into electrical energy when large coils are rotated in a powerful magnetic field. Most commercial power comes from turbine engines powered by steam produced by burning fossil fuels, mainly coal and natural gas. Worldwide, coal is the top fuel source for electricity generation, but use of natural gas and renewable energy sources (solar, wind) has been increasing amid concerns over greenhouse gas emissions. Natural gas surpassed coal as the primary fuel source for US power generators in 2016.
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