Electric Power Generation Industry Overview

Excerpt from Electric Power Generation Report

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 American Electric Power, AES, Dominion Resources, and Duke Energy (all based in the US); China HuaNeng Group and China Power; Tokyo Electric Power Company; and Inter RAO (Russia).

Competitive Landscape

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 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 industry is highly concentrated: the 50 largest companies account for about 85 percent of revenue.

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. Coal produces about 40 percent of electricity used in the US; natural gas, 25 percent; nuclear, 20 percent; hydroelectric, 8 percent; wind, 3 percent; and solar, less than 1 percent.