Electric Power Generation
Description
Companies in this industry operate electric power generation facilities that convert other forms of energy, such as fossil fuels, nuclear, water, wind, and solar power, into electrical energy. Major companies include AES, American Electric Power, Dominion Energy, Duke Energy, Exelon, and Tennessee Valley Authority (all based in the US), along with China Datang Corporation and China Huaneng Group (both based in China), EON (Germany), Inter RAO (Russia), and TEPCO (Japan).
The global electricity industry generates about 30 terawatt-hours of electricity. The leading countries in electricity generation are China, the US, India, Russia, and Japan, according to World Population Review. About 737 million people in the world's population do not have access to electricity, according to Statista.
The US electric power generation industry consists of about 3,300 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $120 billion.
Companies that generate electricity primarily from fossil fuels, nuclear, solar, or wind are covered in separate industry profiles. Companies that transmit and distribute electricity are covered in the Electric Power Transmission, Distribution & Marketing industry profile.
COMPETITIVE LANDSCAPE
While deregulation has altered power markets in many nations, electric utilities often continue to operate as unofficial monopolies in a given service territory. 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, efficiency, 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 the US, the traditional electricity industry consisted of investor-owned utilities, municipal utilities, cooperatives, and government entities that owned the generation, transmission, and retail distribution facilities within a limited area and served all customers within that area as tightly regulated "natural monopolies." Though "natural monopolies" still exist, the electric energy industry underwent a restructuring driven by changes in federal and state laws in the 1990s. In restructured (or deregulated) retail markets, generation, transmission, and distribution operations are carried out by separate companies, and the owners of local distribution lines make their lines available to competitors. The purpose of moving toward a less regulated electricity market was to decrease the cost of electricity by fostering competition among producers. One practical effect was the divestment of generation facilities by many investor-owned utilities.
About 30 states have fully or partly deregulated retail electricity markets, the Energy Professor. Several other states, including California, launched restructuring initiatives before suspending them, in part because of concerns that restructuring caused electricity rates to rise. Many local electricity generators are still owned by utility holding companies that also own power distribution lines, wholesale transmission lines, and wholesale power trading companies.
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. Other power sources include steam from nuclear reactors; conventional hydroelectric conversion; and renewable sources such as solar, wind, and geothermal. Electric power generating firms get majority of their revenue from electricity generation (more than 95%). Other revenue sources come from electricity transmission services.
Power plants typically produce between 500 and 900 megawatts (MW) 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 wholesale power transmission lines (the transmission grid), and then lowered at smaller power substations or transformers to feed local power 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 is 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. Challenges to designs, extensive environmental regulation, and lack of a long-term solution for nuclear waste make the costs of nuclear power plants higher than that of conventional plants. Hydroelectric plants are the most thermally efficient and least polluting generation method, but the number of suitable locations for dams is limited and long-term downstream effects are a growing concern. The US Department of Energy aims to reduce the price of renewable energy such as solar energy to 50% by 2030.
The global electricity industry generates about 30 terawatt-hours of electricity. The leading countries in electricity generation are China, the US, India, Russia, and Japan, according to World Population Review. About 737 million people in the world's population do not have access to electricity, according to Statista.
The US electric power generation industry consists of about 3,300 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $120 billion.
Companies that generate electricity primarily from fossil fuels, nuclear, solar, or wind are covered in separate industry profiles. Companies that transmit and distribute electricity are covered in the Electric Power Transmission, Distribution & Marketing industry profile.
COMPETITIVE LANDSCAPE
While deregulation has altered power markets in many nations, electric utilities often continue to operate as unofficial monopolies in a given service territory. 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, efficiency, 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 the US, the traditional electricity industry consisted of investor-owned utilities, municipal utilities, cooperatives, and government entities that owned the generation, transmission, and retail distribution facilities within a limited area and served all customers within that area as tightly regulated "natural monopolies." Though "natural monopolies" still exist, the electric energy industry underwent a restructuring driven by changes in federal and state laws in the 1990s. In restructured (or deregulated) retail markets, generation, transmission, and distribution operations are carried out by separate companies, and the owners of local distribution lines make their lines available to competitors. The purpose of moving toward a less regulated electricity market was to decrease the cost of electricity by fostering competition among producers. One practical effect was the divestment of generation facilities by many investor-owned utilities.
About 30 states have fully or partly deregulated retail electricity markets, the Energy Professor. Several other states, including California, launched restructuring initiatives before suspending them, in part because of concerns that restructuring caused electricity rates to rise. Many local electricity generators are still owned by utility holding companies that also own power distribution lines, wholesale transmission lines, and wholesale power trading companies.
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. Other power sources include steam from nuclear reactors; conventional hydroelectric conversion; and renewable sources such as solar, wind, and geothermal. Electric power generating firms get majority of their revenue from electricity generation (more than 95%). Other revenue sources come from electricity transmission services.
Power plants typically produce between 500 and 900 megawatts (MW) 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 wholesale power transmission lines (the transmission grid), and then lowered at smaller power substations or transformers to feed local power 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 is 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. Challenges to designs, extensive environmental regulation, and lack of a long-term solution for nuclear waste make the costs of nuclear power plants higher than that of conventional plants. Hydroelectric plants are the most thermally efficient and least polluting generation method, but the number of suitable locations for dams is limited and long-term downstream effects are a growing concern. The US Department of Energy aims to reduce the price of renewable energy such as solar energy to 50% by 2030.
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
Search Inside Report
Pricing
Currency Rates
Questions or Comments?
Our team has the ability to search within reports to verify it suits your needs. We can also help maximize your budget by finding sections of reports you can purchase.
