Fossil Fuel Power Generation
Description
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 Energy, China Power, NTPC (India), SSE (UK), and Tokyo Electric Power Company (Japan).
Fossil fuels still supply more than 80% of the world's energy, according to KPMG. Leading countries that generate electricity are China, the US, Russia, Saudi Arabia, and Canada according to Statista. The number of people around the world who lives without electricity is expected to reach about 750 million, according to the International Energy Agency (IEA).
The US fossil fuel-powered electricity generation industry consists of about 1,700 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $75 billion.
Government entities and cooperatives that own generating plants are not included in US statistics for the industry. Companies that transmit and distribute electricity are covered in the Electric Power Transmission, Distribution & Marketing industry profile. Companies that generate electricity from both renewables and fossil fuels are covered in the Electric Power Generation profile. Companies that generate electricity only from wind are covered in the Wind Power Generation profile. Companies that generate electricity only from the sun are covered in the Solar Power Generation profile.
COMPETITIVE LANDSCAPE
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 80% of revenue.
In about 15 states and the District of Columbia, retail electricity markets have been fully or partly deregulated to encourage competition. In deregulated markets, ownership of generating plants is typically separated from ownership of transmission and distribution facilities.
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. Electricity generation still comprises the majority of the industry revenue to about 98% while other products and services as well as electricity distribution account for the remaining.
Power plants typically produce between 500 and 900 megawatts of power, or enough to supply the needs of 500,000 to 1 million households. Larger plants require special metals and fabrication and require more downtime for maintenance, while smaller units aren't as economical to operate.
The output of the generation plant is stepped up to a high voltage at the transmission substation for connection to the power distribution grid. The grid transports power from multiple power stations to local distribution systems for delivery to homes and businesses.
Selecting the method of powering an electric generator is key to its long-term efficiency, since fuel costs are a significant portion of annual operating expenses. The cost of environmental pollution controls are also a major consideration in selecting a power source. Petroleum and natural gas emissions can be controlled at reasonable costs, but prices for these fuels are often volatile. Coal prices are the most stable of potential fuels, but emission controls can be expensive and some of the control technology is untested.
Fossil fuels still supply more than 80% of the world's energy, according to KPMG. Leading countries that generate electricity are China, the US, Russia, Saudi Arabia, and Canada according to Statista. The number of people around the world who lives without electricity is expected to reach about 750 million, according to the International Energy Agency (IEA).
The US fossil fuel-powered electricity generation industry consists of about 1,700 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $75 billion.
Government entities and cooperatives that own generating plants are not included in US statistics for the industry. Companies that transmit and distribute electricity are covered in the Electric Power Transmission, Distribution & Marketing industry profile. Companies that generate electricity from both renewables and fossil fuels are covered in the Electric Power Generation profile. Companies that generate electricity only from wind are covered in the Wind Power Generation profile. Companies that generate electricity only from the sun are covered in the Solar Power Generation profile.
COMPETITIVE LANDSCAPE
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 80% of revenue.
In about 15 states and the District of Columbia, retail electricity markets have been fully or partly deregulated to encourage competition. In deregulated markets, ownership of generating plants is typically separated from ownership of transmission and distribution facilities.
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. Electricity generation still comprises the majority of the industry revenue to about 98% while other products and services as well as electricity distribution account for the remaining.
Power plants typically produce between 500 and 900 megawatts of power, or enough to supply the needs of 500,000 to 1 million households. Larger plants require special metals and fabrication and require more downtime for maintenance, while smaller units aren't as economical to operate.
The output of the generation plant is stepped up to a high voltage at the transmission substation for connection to the power distribution grid. The grid transports power from multiple power stations to local distribution systems for delivery to homes and businesses.
Selecting the method of powering an electric generator is key to its long-term efficiency, since fuel costs are a significant portion of annual operating expenses. The cost of environmental pollution controls are also a major consideration in selecting a power source. Petroleum and natural gas emissions can be controlled at reasonable costs, but prices for these fuels are often volatile. Coal prices are the most stable of potential fuels, but emission controls can be expensive and some of the control technology is untested.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
Pricing
Currency Rates
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