Thermal Power Plant Market

Market Overview

The global thermal power plant market size was valued at USD 1.4 trillion in 2023 and is projected to reach a value of USD 2.0 trillion by 2032, registering a CAGR of 3.7% during the forecast period (2024-2032). The thermal power plant market share is predicted to grow significantly as global energy demand rises.

A thermal power plant produces electricity by converting heat energy to electrical energy. This process often involves the combustion of fossil fuels such as coal, natural gas, or oil, but it may also use biomass and nuclear energy. The basic idea is to use the heat from fuel combustion to generate steam, which then powers a turbine connected to an electric generator. Thermal power plants play an important role in worldwide electricity production, particularly in areas where renewable energy sources are not yet widespread or reliable.

The thermal power plant market is primarily driven by increased electricity consumption. Increased population generates demand for the residential sector. Rapid industrialization and urbanization, combined with the requirement for energy in heavy industries, are likely to drive the thermal power plant market expansion. Thus, an increase in demand for power is expected to drive market growth.

However, the introduction of environmentally friendly technologies, rigorous limits on greenhouse gas emissions, and health concerns connected with coal-fired power generation are projected to stifle the growth of the thermal power plant market over the forecast period. Furthermore, advancements in combustion technologies are likely to give market growth prospects over the forecast period.

Highlights

• Coal accounts for the largest market share by fuel type.
• More than 800 MW generates the highest revenue share by capacity.
• Simple Cycle dominates the market by turbine type.

Market Dynamics

Global Thermal Power Plant Market Drivers:

Rising Global Energy Demand

One of the main factors propelling the expansion of the thermal power plant industry is the ever-increasing need for energy worldwide. Rising populations, urbanization, and improved economic conditions drive this demand, especially in developing nations. Coal, natural gas, oil, biomass, and nuclear power plants are all examples of thermal power plants essential in addressing this increasing energy demand. There will be a greater demand for power to power the world's expanding population. Urbanization only increases this need because cities need so much energy to run their homes, businesses, and factories. Electricity consumption per capita is higher in urban areas than in rural areas because urban areas are frequently economic activity centers.

According to UN projections, the world's population will reach 9.7 billion by 2050, with a large chunk of that increase happening in cities. As an illustration, the projected tripling of Africa's urban population by 2050 is anticipated to cause a significant surge in electricity consumption. Massive energy consumption has been a byproduct of China's fast urbanization. There was a 1.66 percent growth to 897,578,430 in China's urban population between 2021 and 2022. An estimated 65.2% of Chinese citizens lived in urban areas in 2023, up from 55.75 percent in 2014. As a result, in 2023, 933 million Chinese citizens resided in urban areas, while 477 million called rural areas home. This change has prompted the building of several thermal power facilities to keep up with the soaring demand for power. As an example of the dependence on thermal energy to sustain urbanization, consider China's 47.4 GW of coal power capacity addition in 2023. This accounts for approximately two-thirds of the worldwide operational coal power capacity increase.

Global Thermal Power Plant Market Restraints:

Environmental Concerns and Stringent Regulation

Thermal power plants, particularly those that use fossil fuels such as coal, oil, and natural gas, emit significant amounts of greenhouse gases (GHGs) and pollutants like sulfur dioxide (SO2), nitrogen oxides (NOx), and particulate matter. These emissions significantly contribute to climate change, air pollution, and other health issues. As a result, governments and international organizations have imposed strict environmental laws to manage and minimize emissions from these plants. Compliance with these requirements frequently necessitates considerable investments in pollution control technologies, modifying existing plants, or, in certain situations, shutting down older, less efficient units.

Additionally, the EU approved recommendations to reduce net greenhouse gas emissions by at least 55% by 2030 compared to 1990. This would enable the EU to become the first climate-neutral continent by 2050. The updated EU/2023/2413 directive raises the EU's renewable energy objective for 2030 to at least 42.5%, up from 32%. This would nearly quadruple the European Union's existing renewable energy proportion. As a result, the market growth rate would be reduced during the projection period.

Furthermore, the United States Environmental Protection Agency (EPA) enforces Clean Air Act laws such as the Mercury and Air Toxics Standards (MATS) and the Cross-State Air Pollution Rule (CSAPR). On March 6, 2023, the Environmental Protection Agency (EPA) released a final rule to enhance and update the Mercury and Air Toxics Standards (MATS) for coal-fired power plants. The rule requires continuous emissions monitoring equipment at all coal power facilities, increasing the hazardous metals emissions threshold by 67%.

Global Thermal Power Plant Market Opportunity:

Integrating Renewable Energy

Thermal power plants can play an essential role in integrating renewable energy into the grid by addressing the intermittency issues associated with sources such as wind and solar. Thermal plants supplement renewable energy sources by providing base-load power and system stability, assuring a steady electricity supply even when renewable generation fluctuates. This integration improves grid resilience and allows for a smoother transition to a low-carbon energy system.

The Noor Energy 1 project in Dubai is a hybrid solar power plant using concentrated sun power (CSP) and photovoltaic (PV) technology. It is the world's largest single-site CSP plant and one of the first to employ three distinct solar power technologies. Noor Energy 1 is differentiated by its huge thermal storage capacity, which significantly minimizes the intermittency of power delivery to the grid. Unlike wind and solar PV, which can only create electricity when wind or sunlight, Noor Energy 1 can dispatch previously stored power to the grid for much of the year.

Furthermore, In India, the Ministry of Power (MoP) issued a resolution on February 27 to implement a new concept of 'Renewable Generation Obligation (RGO)' for power producers. Any new coal or lignite-based commercial thermal power station will now be required to generate a part of its energy from renewables. The new RGO mandate requires forthcoming thermal power plants to generate at least 40% of their total output from renewable sources. They will, however, be free to create renewable energy themselves or obtain it from other sources.

Regional Analysis

Asia-Pacific Dominates the Global Market

The global thermal power plant market analysis is conducted in North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.

Asia-Pacific is the most significant global thermal power plant market shareholder and is estimated to grow at a CAGR of 3.5% over the forecast period. Asia-Pacific is home to the world's leading coal corporations, including Coal India Limited. Coal India is a significant supplier of coal around the world. The abundance of coal in the Asia-Pacific area has resulted in the availability of inexpensive coal. Furthermore, growing industrialization and urbanization in countries such as China, India, South Korea, and Indonesia have contributed significantly to the region's increased demand for thermal power. China and India are the world's manufacturing hubs, and several large regional companies have considerably increased their thermal electricity consumption.

Additionally, rising government investments in urbanization and industrialization are predicted to significantly enhance market growth during the forecast period. Rising government investments in the construction of thermal power plants such as the Phulkari Coal Powered Plant in Bangladesh, the Patratu Super-Thermal Power Plant (Coal) in India, the Fuyang Power Station, and the HuadianLaizhou Power Station in China are expected to drive the Asia Pacific thermal power plant market during the forecast period.

North America is anticipated to exhibit a CAGR of 3.3% over the forecast period. Natural gas is the primary fuel used to generate electricity from thermal power plants. The abundant supply of gas from countries such as Russia and the United States has contributed significantly to the expansion of the thermal power plant market. Natural gas is in significant demand in the United States for electricity use in thermal power plants. A well-established and robust infrastructure primarily drives the thermal power plant market. Rising investment in the United States to build thermal power capacity, combined with increasing electricity consumption, is likely to fuel the expansion of the North American thermal power plant market in the coming years.

Europe is also predicted to make a considerable contribution over the projection period. With the decommissioning of coal plants in several nations across the region, the market is expected to be driven by natural gas-based power generation. Russia's upcoming nuclear projects and France's massive reliance on nuclear energy will drive the industry forward. Although coal and nuclear power are expected to dwindle, natural gas will present many opportunities shortly due to planned developments. Russia is predicted to increase in the following years due to its high power demand, rising natural gas output, and planned projects.

Segmental Analysis

The global thermal power plant market is segmented based on fuel type, capacity, and turbine type.

The market is further segmented by fuel type into Coal, Natural Gas, and Nuclear.

The coal category accounted for a significant part of the thermal power plant market in 2023, as coal is a vital source of power generation due to its abundant availability and low cost compared to other power generation processes. Coal has long been a popular and commonly used fuel for thermal power generation due to its abundance and low price. When coal is burned, it emits energy that heats water in boilers to make steam, which then powers turbines to generate electricity.

However, coal burning produces considerable amounts of greenhouse gases, sulfur dioxide, and particulate matter, contributing to air pollution and climate change. Despite environmental concerns, coal-fired power plants continue to generate significant amounts of electricity in many parts of the world, particularly in nations with extensive coal deposits and limited access to alternate energy sources.

Furthermore, rapid urbanization and industrialization in growing markets such as Asia-Pacific and Central and South America have increased energy demand for residential and commercial applications. This is projected to increase demand for coal from thermal power plants over the predicted period.

Natural gas is a more adaptable and cleaner-burning fuel than coal or oil, making it a preferred choice for thermal power generation. When natural gas is burned, it emits fewer pollutants and greenhouse gases, resulting in a less negative environmental impact. Natural gas-fired power plants are also more adaptable and efficient, with shorter startup times and reduced operating expenses.

As a result, natural gas has become the preferred fuel for new thermal power plant development, particularly in countries with large natural gas reserves. Furthermore, advances in gas turbine technology have increased the efficiency and performance of natural gas-powered power plants.

Based on capacity, the market is fragmented into 400 MW, 400-800 MW, and More than 800 MW.

More than 800 megawatt plants led the worldwide thermal power plant market. Thermal power plants with capacities greater than 800 MW are categorized as large-scale facilities, and they are frequently distinguished by the employment of cutting-edge technology and significant infrastructure. These plants are essential contributors to grid stability and supply a considerable amount of a region's electricity. Plants with capacities greater than 800 MW can generate electricity at a lower cost and are strategically situated to serve densely inhabited areas or industrial hubs. However, building and operating such large-scale reactors needs significant investments and precise planning to solve environmental and regulatory concerns.

In addition, the increase is linked to greater demand for roughly 800 MW of power across various businesses. Rapid industrialization and dramatically increased global power demand have resulted in the rise of this market over the last decade. Rising investments in the modernization of underdeveloped economies will likely boost this segment's expansion and the overall thermal power plant market shortly.

Thermal power plants with capacities ranging from 400 to 800 MW are classified as medium-scale facilities, and they are more common in areas with moderate to high electricity demands. These facilities often use more modern and efficient technology, such as supercritical and ultra-supercritical boilers, to maximize energy production while minimizing environmental effects. With its increased capacity, 400-800 MW plants significantly address the power needs of industrial, commercial, and residential consumers and play an essential role in maintaining grid dependability and stability.

The market can be further bifurcated by turbine type into Simple Cycle and Combined Cycle.

Simple cycle gas turbines are a type of thermal power generating that uses the Brayton cycle. In this system, air is compressed, combined with fuel, and ignited. The resulting heated gases expand via a turbine, generating mechanical power that drives a generator, which produces electricity. Simple cycle plants are generally simple in design and can be started and stopped quickly, making them excellent for generating peak power and managing sudden variations in electricity demand.

For example, in the United States, simple cycle plants are frequently used to supply additional power during peak demand periods, such as hot summer days when air conditioning is in high demand. According to the U.S. Energy Information Administration (EIA), simple cycle plants can attain 35-40% efficiencies, which is lower than combined cycle plants but sufficient for grid stability and peak demand control.

Combined cycle power plants create energy using gas and steam turbines, considerably improving overall efficiency. A gas turbine creates electricity in a mixed-cycle system while emitting hot exhaust gasses. These gasses are converted into steam in a heat recovery steam generator (HRSG). The steam drives a steam turbine, which produces more electricity. This dual method maximizes energy extraction from the fuel while achieving higher efficiency than simple cycle plants.

Recent Developments

• April 2024- EDF and Pod Point announced a new smart charging program to help balance the grid.
• April 2024- Siemens AG, a global technology leader, and Hon Hai Technology Group (Foxconn), the world's largest electronics manufacturer, signed a memorandum of understanding (MoU) to accelerate digital transformation and sustainability in smart manufacturing platforms.
• February 2024- PM Modi virtually announced numerous development projects totaling more than Rs 34 crore in Chhattisgarh. The projects serve various vital sectors, including roads, railways, coal, power, and solar energy.