The United States thermal power market is expected to grow at a CAGR of more than 0.5% during the forecast period of 2020-2025. Factors such as declining natural gas prices in the last decade are expected to drive the United States thermal power market during the forecast period. However, reducing renewable energy prices has provided an economically viable cleaner alternative, which is expected to restrain the market's growth.
Key Highlights
- Natural gas provides for a large amount of electricity in the country and is expected to dominate the thermal power market in the forecast period. The application of natural gas as an intermediary for transitioning to renewable energy is expected to aid the market during the forecast period.
- The technological advancements in efficiency and reduction in the harmful emissions from thermal power projects are expected to create several market opportunities in the future.
- The increasing investments in the thermal power plants from private firms and several state governments are expected to drive the United States thermal power market during the forecast period.
Key Market Trends
Natural Gas Expected to Dominate the Market
- Natural gas is among the cleanest fuels, which can provide electricity at an industrial scale economically. Gas-fired power generation has already started to displace coal capacity in the country and is expected to replace it entirely in the coming decades. Although investments in renewables are expected to grow significantly, the flexibility afforded by gas-fired power generation is expected to continue to be in demand.
- Among the most significant drivers of the natural gas thermal power plants is its use as backup power for unreliability in renewable sources like wind and solar. Natural gas plants can start running on short notice, which can increase the utility grid's reliability.
- In 2019, natural gas was the largest source of electricity generation in the United States. The electricity generation from gas-fired power plants in the country was 1586 billion kilowatt-hours (KWh), which accounted for 38.4% of the total electricity generated in the country.
- The country has seen a significant increase in shale oil and gas production, drastically reducing the United States' dependence on the global energy supply chains. Reduction in natural gas prices has further aided the growth of the natural gas thermal power market.
- Therefore, owing to the above points, the natural gas segment is likely to dominate the market growth during the forecast period.
Increasing Investments in Thermal Power Expected to Drive the Market
- In the United States, the different states are following different paths to establish thermal power plants. For example, the state of California is dominated by Natural gas, but the state is pushing its utilities to replace natural gas power plants with renewables and other resources. Other states like in the mid-west are following a more natural gas-based approach for their energy needs.
- In 2019, sources such as coal, natural gas, and petroleum accounted for around 63% of the country's total electricity generation mix. The mix of energy sources for the country's electricity generation has changed over time, especially in recent years. Although the share of coal-fired power generation capacity is gradually decreasing, the increasing number of gas-fired power plants is expected to boost the country's overall thermal power generation capacity during the forecast period.
- In 2019, the country's total thermal power generation capacity was 739 gigawatts (GW), which was about 67% of the country's total electricity generation capacity.
- In 2019, the Florida Public Service Commission approved a pair of new gas-fired power plants to serve the future power demand of cooperative electric customers. Regulators say the combined projects will save customers USD 363 million. Seminole Electric Cooperative is expected to construct a new 1.1 GW plant in Putnam County, expected in service in 2022. Shady Hills Energy Center is expected to build a new 573 MW natural gas facility in Pasco County, which is likely to be in service in late 2021.
- Therefore, owing to the above points, the increasing thermal power investments are expected to drive the United States thermal power market during the forecast period.
Competitive Landscape
The United States thermal power market is moderately fragmented. Some of the key players in this market include NextEra Energy, Inc., Dominion Energy, Inc., Duke Energy Corporation, Southern Company, and American Electric Power Company Inc
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