Market Trends of US Thermal Power Industry
Natural Gas Expected to Dominate the Market
- Natural gas is among the cleanest fuels and can provide electricity at an industrial scale on an economically sound basis. 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 their 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 2021, natural gas was projected to be the largest source of electricity generation in the United States. The electricity generation from natural gas in the country was 1693.8 terawatt-hours, 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 global energy supply chains. Reductions in natural gas prices have 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 market growth during the forecast period.
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Increasing Investments in Thermal Power Expected to Drive the Market
- In the United States, 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 those in the Midwest, are following a more natural gas-based approach for their energy needs.
- In 2021, 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 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 July 2022, a natural gas-fired power plant entered service in southwest Michigan. The cost of the project was USD 1.1 billion, and it was built by Kiewit Corporation and features equipment from General Electric.
- Therefore, owing to the above points, increasing thermal power investments are expected to drive the United States thermal power market during the forecast period.
