Power Generation Market Size, Share, Growth & Industry Analysis, By Source (Non-Renewable (Fossil Fuel and Nuclear), and Renewable (Hydropower, Wind Power, Solar PV, and Others)), By End-Use (Industrial, Commercial, and Residential), and Regional Analysis, 2024-2031

Power Generation Market Size

Global Power Generation Market size was recorded at USD 1,511.20 billion in 2023, which is estimated to be at USD 1,595.40 billion in 2024 and projected to reach USD 2,439.33 billion by 2031, growing at a CAGR of 6.25% from 2024 to 2031. In the scope of work, the report includes services offered by companies such as General Electric, Siemens AG, Mitsubishi Heavy Industries, China National Nuclear Corporation, NextEra Energy, Inc., Enel Spa, Duke Energy Corporation, Tata Power, Ørsted A/S, Schneider Electric and others.

The increase in population and rapid industrialization are significantly driving power demand. Decentralization of power generation is driving power generation market growth. This trend is driven by several factors, including the increasing viability and cost-effectiveness of renewable energy sources such as solar and wind, which are installed at a smaller scale directly at the point of use. By generating power locally, decentralized systems reduce the need for extensive transmission and distribution networks, which lead to significant reductions in energy losses and enhanced reliability. This model also enhances energy security and resilience by mitigating the impact of centralized grid failures and natural disasters.

Moreover, the decentralization of power generation empowers consumers, allowing them to become prosumers who consume, produce, and sell electricity. This democratization of energy production is fostering innovation and competition, driving advancements in technology and efficiency. This shift is fueled by the growing affordability and efficiency of renewable technologies, as well as supportive regulatory frameworks and incentives from governments that encourage localized generation solutions.

Power generation is the process of producing electrical energy from primary energy sources. This encompasses a wide range of technologies and methods used to convert various forms of energy into electricity. The primary sources for power generation include fossil fuels (such as coal, natural gas, and oil), nuclear energy, and renewable sources such as wind, solar, hydropower, geothermal, and biomass. Each of these sources undergoes specific processes to transform the raw energy into usable electrical power.

For instance, in a coal-fired power plant, coal is combusted to produce steam that drives a turbine connected to an electricity generator. In contrast, solar power utilizes photovoltaic cells to convert sunlight directly into electricity. The generated power is then distributed via transmission lines to homes, businesses, and industries. Applications of power generation are vast and essential for modern life, providing the energy required for residential heating and cooling, powering industrial machinery, enabling communication systems, and supporting transportation networks. As the global demand for electricity continues to rise, diversifying and optimizing power generation methods is critical for sustainable development.

Analyst’s Review

The global market is experiencing transformative growth driven by technological advancements and shifting regulatory landscapes. Key companies in the market are strategically focusing on diversifying their energy portfolios to include a higher proportion of renewable energy sources. These strategies are driven by both economic incentives and regulatory pressures aimed at reducing carbon emissions and promoting sustainable energy practices. Currently, these companies are investing heavily in research and development to innovate and improve the efficiency and storage capabilities of renewable energy technologies.

Moreover, strategic partnerships and acquisitions are common as companies seek to enhance their technological capabilities and market reach. The power generation market growth is also fueled by significant investments in smart grid infrastructure, which promises to enhance the reliability and efficiency of power distribution. Key players are expanding their renewable energy assets integrating digital technologies such as AI and IoT to optimize operations and maintenance. The imperative for these companies is clear: to remain competitive, they must continue to innovate, scale their renewable energy investments, and navigate the evolving regulatory environment effectively.

• For instance, in June 2024, Mitsubishi Heavy Industries and Electricity Generating Authority of Thailand (EGAT), signed an MoU to research hydrogen co-firing technologies for gas turbine power plants in Thailand, targeting a hydrogen co-firing ratio of 20%.

Power Generation Market Growth Factors

The increase in population and rapid industrialization are propelling energy demand, necessitating the expansion and diversification of power generation market. As global population rises, particularly in urban areas, the demand for residential electricity usage is escalating, encompassing lighting, heating, cooling, and a plethora of household appliances. Simultaneously, industrialization, especially in emerging economies, is boosting electricity consumption due to the energy-intensive nature of manufacturing processes, machinery operation, and infrastructural development.

This surge in demand is pushing nations to expand their power generation capabilities and diversify their energy sources to ensure stable and reliable electricity supply. To meet these growing needs, investments are being funneled into both traditional and renewable energy projects, fostering innovation and technological advancements in power generation.

This drive toward diversification is crucial for meeting the rising energy demands for enhancing energy security and reducing the environmental impact of power generation. The combined pressures of population growth and industrial expansion are acting as a powerful catalyst for the global energy sector, prompting continuous evolution and adaptation.

Grid stability and integration issues represent a significant challenge in the modern power generation landscape for the power generation market. Renewable energy, such as wind and solar, is inherently intermittent and variable, which leads to fluctuations in power supply that challenge the stability of the grid. Traditional grids, designed for steady and predictable inputs from large, centralized power plants, struggle to adapt to the variable output of renewable sources. This result in voltage instability, frequency deviations, and even blackouts if not managed properly.

Furthermore, integrating decentralized generation systems and new technologies such as electric vehicles and distributed storage adds layers of complexity to grid management. To address these challenges, substantial investments are required in advanced grid infrastructure, including smart grids that use digital communication technology to detect and respond to local changes in usage.

Energy storage systems, such as batteries, also play a critical role in buffering the intermittent supply of renewable energy. Thus, while renewable energy integration is essential for sustainable development, it demands comprehensive strategies and significant technological advancements to maintain grid stability and reliability.

Power Generation Market Trends

Surging investments in smart grid infrastructure signify a transformative trend in the power generation market. Smart grids utilize digital technology to enhance the efficiency, reliability, and sustainability of electricity delivery systems. These grids integrate advanced metering infrastructure, automated control systems, and sophisticated data analytics to monitor and manage electricity flows dynamically.

One of the primary drivers behind this trend is the growing need to accommodate the fluctuating nature of renewable energy sources, such as solar and wind, into the power grid. Smart grids respond in real-time to changes in energy production and consumption, balancing supply and demand more effectively than traditional grids. Additionally, the deployment of smart grid technologies facilitates the integration of distributed generation resources, electric vehicles, and energy storage systems.

Governments and private investors are increasingly recognizing the long-term benefits of these systems, including reduced operational costs, enhanced grid security, and improved customer engagement through better energy management tools. As a result, significant financial resources are being allocated to modernize grid infrastructure globally, ensuring a more resilient and adaptable energy system for the future.

Segmentation Analysis

The global market is segmented based on source, end-use, and geography.

By Source

Based on source, the market is segmented into non-renewable and renewable. The non-renewable segment is further classified into fossil fuel and nuclear. The non-renewable segment captured the largest power generation market share of 70.15% in 2023, largely attributed to several key factors. First and foremost, the existing infrastructure for non-renewable energy sources such as coal, natural gas, and oil is well-established and extensive.

These traditional energy sources have been the backbone of global power generation for decades, providing reliable and consistent energy supply. Their technological maturity and economic efficiency make them a default choice for many regions, especially where transitioning to renewable energy is still financially or logistically challenging. Additionally, non-renewable energy plants often have longer operational lifespans and higher capacity compared to many renewable energy installations, which are intermittent and variable.

Furthermore, in many developing countries, the rapid industrialization and urbanization processes depend heavily on non-renewable energy sources due to their availability and the lack of sufficient investment in renewable infrastructure. The global energy market's volatility and fluctuations in oil and gas prices drive short-term spikes in reliance on non-renewables. despite the push for cleaner energy, regulatory and policy environments in some regions still favor fossil fuel industries due to their economic significance and lobbying power. All these factors combined have contributed to the dominant market share of the non-renewable segment in 2023.

By End-Use

Based on end-use, the power generation market is classified into industrial, commercial, and residential. The industrial segment is poised to record a staggering CAGR of 7.31% through the forecast period due to several driving factors. Industrial operations are inherently energy-intensive, requiring substantial and continuous power for manufacturing, processing, and production activities. As global industrialization accelerates, particularly in emerging economies, the demand for electricity in this sector is experiencing robust growth.

• Technological advancements and the adoption of Industry 4.0 practices, which include automation, artificial intelligence, and the Internet of Things (IoT), are thereby increasing energy consumption as these technologies often require significant power to operate.

Additionally, industries are expanding their production capacities to meet rising global demand for goods, which translates directly into higher energy requirements. Furthermore, regulatory pressures to enhance energy efficiency and reduce carbon footprints are prompting industries to invest in new, more efficient power generation and management systems. The shift toward electrification in various industrial processes, driven by the need to reduce dependency on fossil fuels and mitigate environmental impact, is also contributing to the increased power demand.

Power Generation Market Regional Analysis

Based on region, the global market is classified into North America, Europe, Asia Pacific, MEA, and Latin America.

The Asia-Pacific power generation market share stood around 36.18% in 2023 in the global market, with a valuation of USD 546.75 billion. The region's rapid economic growth, particularly in countries such as China and India, has led to a substantial increase in energy demand to support industrial activities, urbanization, and improved living standards. These countries are heavily investing in expanding their power generation capacities, both through traditional non-renewable sources and increasingly through renewable energy projects.

• For instance, China continues to be a global leader in both coal-fired power generation and renewable energy installations, including wind, solar, and hydroelectric power.

Additionally, government policies and initiatives across Asia-Pacific are increasingly focusing on energy security and sustainability, prompting investments in diverse energy sources and advanced technologies. The region's vast population and ongoing urban development necessitate continuous enhancement and expansion of the energy infrastructure, thereby solidifying its large market share. Moreover, international investments and collaborations in energy projects within Asia-Pacific are contributing to the robust growth and valuation of the regional power generation market.

North America is poised to grow at the highest CAGR of 7.39% over 2024-2031. The region's growth is primarily fueled by the increasing shift toward renewable energy sources, supported by substantial government policies and incentives aimed at reducing greenhouse gas emissions and promoting sustainability. The U.S. and Canada are leading the charge with significant investments in renewable energy infrastructure in order to transition away from fossil fuels and reduce carbon emissions. Government policies, such as tax incentives, subsidies, and regulatory mandates, are fostering a conducive environment for renewable energy development.

The push for energy efficiency and sustainability is prompting the widespread adoption of solar, wind, and battery storage technologies. Additionally, advancements in grid modernization and smart grid technologies are enhancing the efficiency and reliability of power distribution, thereby supporting growth.

• North America's commitment to technological innovation is also evident in the increasing integration of AI and IoT in energy management systems, which optimizes energy production and consumption patterns.

Furthermore, the region's focus on energy independence and security, coupled with the rising demand for clean energy from both industrial and residential sectors, is propelling regional industry growth.

Competitive Landscape

The power generation market report will provide valuable insight with an emphasis on the fragmented nature of the industry. Prominent players are focusing on several key business strategies such as partnerships, mergers and acquisitions, product innovations, and joint ventures to expand their product portfolio and increase their market shares across different regions. Manufacturers are adopting a range of strategic initiatives, including investments in R&D activities, the establishment of new manufacturing facilities, and supply chain optimization, to strengthen their market standing.

List of Key Companies in Power Generation Market

• General Electric
• Siemens AG
• Mitsubishi Heavy Industries
• China National Nuclear Corporation
• NextEra Energy, Inc.
• Enel Spa
• Duke Energy Corporation
• Tata Power
• Ørsted A/S
• Schneider Electric

Key Industry Developments

• May 2024 (Investment): GE Vernova confirmed an order for 16 LM6000VELOX aeroderivative gas turbine package solutions, featuring an LM6000 turbine and generator. These units will be deployed at Tennessee Valley Authority (TVA)’s Kingston Energy Complex near Kingston, Tennessee, aiming to provide up to 850 megawatts of electricity. This initiative aims to bolster grid reliability and ensure uninterrupted, cost-effective power for TVA's consumers.
• May 2024 (Agreement): Mitsubishi Power Americas and CONSAG Engenharia signed an EPC agreement with Portocem Geracao de Energia S.A. and New Fortress Energy to develop the Portocem Thermoelectric Power Plant (UTE Portocem) in Brazil.
• February 2024 (Expansion): GE Vernova’s Grid Solutions division secured multi-million-dollar orders from Power Grid Corporation of India (PGCIL) for supplying 765 kV Shunt Reactors. These orders support PGCIL’s initiatives to integrate renewable energy into India’s national grid and enhance electricity transmission.

The global power generation market is segmented as:

By Source

• Non-Renewable
  • Fossil Fuel
  • Nuclear
• Renewable
  • Hydropower
  • Wind Power
  • Solar PV
  • Others

By End-Use

• Industrial
• Commercial
• Residential

By Region

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • France
  • U.K.
  • Spain
  • Germany
  • Italy
  • Russia
  • Rest of Europe
• Asia-Pacific
  • China
  • Japan
  • India
  • South Korea
  • Rest of Asia-Pacific
• Middle East & Africa
  • GCC
  • North Africa
  • South Africa
  • Rest of Middle East & Africa
• Latin America
  • Brazil
  • Argentina
  • Rest of Latin America