THERMAL POWER PLANT MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)

Market Size and Trends

The thermal power plant market is estimated to be valued at USD 1,532.34 Bn in 2024 and is expected to reach USD 1,949.57 Bn by 2031, growing at a compound annual growth rate (CAGR) of 3.5% from 2024 to 2031.

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The thermal power plant market is expected to witness significant growth owing to rising demand for energy across the globe. Many countries are heavily investing in the modifications of existing power plants to reduce carbon emissions. Governments are providing incentives and subsidies and enacting stricter regulations for emission control converting thermal plants to natural gas based to optimize energy production in an environment-friendly manner. This is driving technologies like efficiency improvement, carbon capture, usage, and storage. However, increasing focus on the use of renewable sources of energy worldwide may hamper the growth of thermal power plants.

Rising energy demands

With global energy demands rapidly rising due to industrialization and urbanization occurring all over the world, especially in emerging economies, the needs for stable, abundant, and affordable sources of power generation have also increased significantly. For instance, as per the U.S. Energy Information Administration (EIA), in 2020, coal continued to supply the majority (44%) of India's total energy consumption, followed by petroleum and other liquids, which accounted for 24% of the total energy consumption. Thermal power plants, which mainly use coal, natural gas, or oil as their fuel sources, currently represent the bulk of the global electricity supply and their role is expanding further to help meet this growing appetite for energy. According to estimates, the global energy consumption could rise anywhere between 25% and 50% in the coming decades and maintaining economic growth trajectories in many developing nations will require reliable and sustained access to power. While renewable sources of energy are an important long term solution, fossil fuel-based thermal plants provide the dispatchable base load capacity needed to satisfy persistent around the clock power demands of industrial and residential consumers. Given inherent constraints around the variability and intermittent nature of many renewables right now, thermal infrastructure will continue dominating the global energy mix for the foreseeable future and drive considerable investment into new plant installations and upgrades of existing fleets across geographies.

Market Concentration and Competitive Landscape

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In the current globalized world which is heavily dependent on trade for meeting essential commodity needs, having strategic control over critical energy resources has become an important priority for nations. While liberalization of power markets has opened up opportunities for international partnerships and fuel imports, many countries are also exploring measures to enhance their self-sufficiency and reduce external vulnerabilities through domestic production and indigenization. Thermal power, being a tried and tested technology, provides an attractive option in this regard given indigenous reserves of coal exist in several countries or can be cost effectively imported from reliable partners. There is a growing focus amongst governments as well as private sector investors on establishing robust indigenous fuel supply chains, local manufacturing capacity for plant components and construction capabilities as a way to counter external supply disruptions and price fluctuations. New indigenous coal mining projects and LNG infrastructure are driving interest in setting up thermal plants alongside to promote energy security. Initiatives around integrated energy parks and dedicated power corridors also aim to decentralize risks and strengthen energy autonomy for nations over the long run.

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The thermal power plant market faces several challenges. Stringent environmental regulations around the world are pushing these plants to reduce their carbon emissions. This requires significant capital investments in carbon capture technologies, which puts pressure on margins. Additionally, the rising demand for renewable energy is increasing competition from wind and solar power. Thermal plants must now offer competitively priced electricity to counter cheaper alternatives. An aging infrastructure in several developed markets needs modernization as well, incurring heavy maintenance and upgrade costs.

Market Opportunities: Emerging economies

Emerging economies continue to experience rapid industrialization and urbanization, fueling the electricity demand growth. Thermal plants remain the most reliable solution for providing base load power needs at scale. Their modular design allows for convenient capacity expansion. The adoption of supercritical and ultra-supercritical technologies also enhances efficiency. The integration of AI and IoT can optimize plant performance.

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Coal accounts for 47.3% share of the thermal power plant market due to its reliable and abundant domestic reserves across many countries. Coal power is economical for base-load electricity generation due to the stable supply and low fuel costs of coal. Many power companies prefer to use coal as it allows for greater energy independence compared to relying on imported natural gas. Countries with significant coal reserves, such as China, India, and the U.S., can leverage their domestic coal mining industries to fuel coal-fired power plants and satisfy the rising electricity demand. Additionally, coal plants require less infrastructure investment compared to natural gas plants since coal does not need to be transported via pipelines and can use existing rail and port networks. While concerns around coal's carbon emissions are increasing environmental regulations, many power producers still see coal as an affordable option for meeting base load electricity needs well into the future. Overall, the plentiful coal reserves together with relatively lower investment needs make coal the dominant fuel choice within the thermal power plant market segment.

Insights, By Capacity: Growing natural gas resources and combined cycle efficiencies push gas capacity expansion

Within the capacity segment of more than 800MW, gas-fired plants are taking up a higher share driven by increasing domestic shale gas production and improvements in combined cycle technology. Countries are leveraging newly accessible shale gas reserves to reduce import dependence and fuel additional gas-fired power capacity. For example, the U.S. has seen a shale gas boom that has boosted domestic natural gas supplies and enabled the addition of multiple gigawatts of new combined cycle gas plant capacity. Additionally, the high efficiency of modern combined cycle gas turbines has significantly reduced the operating costs of gas power generation. Combined cycle plants can achieve efficiencies over 60% by capturing waste heat to power a secondary steam turbine. These efficiency gains help displace less economical coal capacity as power producers pursue the clearest path to reducing emissions intensity per unit of electricity. Overall, abundant shale gas reserves combined with efficiency advantages of combined cycle units are translating to faster capacity expansion for the largest gas plants within the over 800MW segment.

Insights, By Turbine Type: Improving performance and flexibility boosts the combined cycle market share

In the turbine type segment, combined cycle has emerged as the dominant configuration driven by continuous design improvements that enhance performance and flexibility compared to simple cycle plants WITH 42.1%. Modern gas turbines for combined cycle service can achieve very high fuel efficiencies and dependability due to advances in materials, cooling, and combustion controls. This enables greater power output over longer operating cycles to maximize asset utilization. In addition to efficiency gains, combined cycle plants are able to ramp output levels quicker than base load coal units to help balance intermittent renewable energy on the grid. Their flexibility allows more penetration of solar and wind power while maintaining grid stability. Power producers are also able to dispatch combined cycle capacity based on spot price electricity markets, burning less fuel during low demand periods. Overall, as turbine OEMs continue enhancing the reliability, performance, and operational flexibility of combined cycle systems, their market predominance within the turbine type segment will remain secure versus simple cycle alternatives.

Regional Insights

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North America continues to dominate the global thermal power plant market with 42.4% share owing to a strong presence of key industry players and sizable demand in the U.S. The region houses many large utilities as well as engineering, procurement, and construction firms with expertise in setting up thermal power assets. States, such as Texas and Florida, rely heavily on fossil fuel-based power generation, sustaining demand. Furthermore, periodic maintenance and upgrades of aging infrastructure reinforce the aftermarket. However, the North American market has matured over the years with incremental demand expected in future. Stringent environmental norms might also impact capacity additions going ahead.

The Asia Pacific region has emerged as the fastest growing market for thermal power equipment and services. Developing economies across South East Asia, South Asia, and China are witnessing phenomenal industrialization and urbanization. This translates to exponential growth in power demand which domestic players alone cannot satisfy. Countries like India, Indonesia, and Vietnam have liberalized their power sectors inviting foreign investment. Local constructors continue undertaking massive capacity addition programs backed by public sector undertakings and private developers. Their inherent cost competitiveness combined with demand uptick makes the APAC region highly attractive. Local manufacturers are enhancing their portfolio through collaborations for advanced technologies too. While import dependency exists for certain high-end components, localizing the supply chain has become a priority. This presents opportunities for technology transfer and component manufacturing by overseas firms. Additionally, the operational requirements of the fast expanding asset base will progressively augment the aftermarket business over the coming decade. Adequate fuel availability along with emphasis on energy security also drives the expansion of domestic coal resources and import infrastructure in major APAC economies.

Market Report Scope

Key Developments

• In October 2021, American Electric Power agreed to sell its Kentucky businesses, including Kentucky Power and AEP Kentucky Transco, to Liberty, a parent company of Algonquin Power & Utilities Corp's regulated utility subsidiary, for a US$ 2.84 Bn enterprise value
• In January 2021, Huaneng announced to add more than 80GW of clean energy power capacity, bringing clean energy to more than half of the company's total installed generation capacity by 2022
• In July 2022, a natural gas-fired power plant entered service in Southwest Michigan. The cost of the project was USD 1.1 Bn, and it was built by Kiewit Corporation and features equipment from General Electric.
• The Union Cabinet Committee on Economic Affairs (CCEA) approved the proposal for equity investment for two thermal power plants in India on January 18, 2024. The two plants will be set up by subsidiaries of Coal India Limited, with the aim of providing affordable electricity to the people at a reasonable cost.

*Definition: The thermal power plant market involves companies that generate electricity through the combustion of fossil fuels such as coal, natural gas, fuel oils, or biomass. Thermal power plants house large boiler systems that produce high-pressure steam from heated water. This steam powers turbines connected to generators that produce electricity. Key products and services in this market include coal and natural gas combustion equipment, steam generation components, turbines, generators, waste heat recovery systems, pollution control devices, and plant maintenance and control systems.

Market Segmentation

•  Fuel Type Insights (Revenue, USD Bn, 2019 - 2031)
  • Coal
  • Natural Gas
  • Others (Nuclear, etc.)
•  Capacity Insights (Revenue, USD Bn, 2019 - 2031)
  • 400 MW
  • 400-800 MW
  • More than 800 MW
•  Turbine Type Insights (Revenue, USD Bn, 2019 - 2031)
  • Simple Cycle
  • Combined Cycle
• Regional Insights (Revenue, USD Bn, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East
    • GCC Countries
    • Israel
    • Rest of Middle East & Africa
• Key Players Insights
  • EDF
  • American Electric Power Company, Inc.
  • Siemens AG
  • General Electric Company
  • Chubu Electric Power Co. Inc.
  • National Thermal Power Corporation Limited
  • ENGIE
  • Duke Energy Corporation
  • SSE
  • NTPC Limited
  • Adani Power Limited.
  • Tata Group.
  • Reliance Power Limited.
  • Maharashtra State Power Generation Co. Ltd.
  • Nuclear Power Corporation of India (NPCIL)
  • India Power Corporation Ltd.
  • Jindal Steel & Power Limited.
  • NS Energy Group