The European power market is expected to grow at a CAGR of more than 5.6% in the forecast period of 2020-2025. With the decommissioning of coal plants in several nations across the region, the demand for natural gas-based power generation is expected to drive the market. The upcoming nuclear projects in Russia and a massive dependency of France on nuclear energy are expected to drive the market further. On the other hand, the decommissioning of several nuclear and coal plants across the different nations coupled with an increasing shift towards renewable energy sources is restraining the growth of the market in the forecast period. Moreover, due to the COVID-19 pandemic, the power demand has reduced in Europe significantly, restraining the growth of the market studied further.
Key Highlights
- With increasing natural gas production and decreasing prices, the share of natural gas is rising and expected to grow at a significant rate.
- Although the share of coal and nuclear power is expected to decrease in the future; natural gas is expected to create ample opportunities with upcoming projects in the near future.
- Russia is anticipated to dominate the market in the coming years. With the largest power demand, increasing natural gas production, and upcoming projects, the nation is expected to create significant market opportunities.
Key Market Trends
Natural Gas Based Thermal Power to Witness Significant Growth
- In 2018, Total signed an agreement with KKR-Energas to acquire two of its gas-fired combined cycle power plants with an electricity generation capacity of approximately 825 megawatts. With increasing interest and investments in gas-based power plants, the market is expected to grow significantly.
- In 2019, Siemens announced to build a new combined-cycle power plant in western France. The company will also operate and maintain the plant for a period of 20 years. With an installed capacity of 446 megawatts, the plant is likely to add in the market growth.
- In 2019, Germany launched one of Europe’s most modern gas-fired power plants replacing coal-fired power stations. The plant is a flexible gas engine-based combined heat and power (CHP) plant and has a capacity of 192 MW.
- Natural gas held a significant share of electricity generation in Europe. With 1287 TWh of electricity generation in 2019, the share of natural gas is expected to grow in the forecast period.
- With advantages like low emissions in comparison of coal and less harms inn comparison of nuclear, the market share of natural gas in power generation is likely to grow in the future.
Russia to Dominate the Market
- Power generation uses a variety of sources ranging from fossil fuels like coal, natural gas, and oil to renewable sources like wind and solar. The energy mix for electricity generation is dominated by fossil fuels, with the three constituting over 63% of the Russian energy mix.
- As of 2019, Russia has four nuclear power reactors under construction, 24 reactors under planned, and 22 units under the proposed stage. In December 2019, Russia had officially commissioned the world’s first floating nuclear power plant (NPP)-Akademic Lomonosov, driving the thermal power market significantly.
- The power generation mix is heavily skewed towards natural gas with a significant contribution because of cheaper domestic fuel availability and vast reserves present in Russia itself. Its share in the mix has increased over the years due to constraints in adding other conventional generation sources-hydro, solar, and oil.
- With 5% of the global nuclear market and 8% of the world production of natural uranium, Nuclear Energy is one of the significant sources of power in Russia contributing 18% of electricity in 2019 and is expected to grow further in the forecast period.
- Russia is highly dependent on its hydrocarbon reserves for energy requirements because of its vast reserves. With increasing power demand, the nation is expected to witness significant growth in thermal power.
Competitive Landscape
The Europe thermal power is moderately fragmented. Some of the major companies include Siemens AG, Enel S.p.A, Electricite de France SA, Engie SA, and Rosatom State Atomic Energy Corporation.
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