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

The global power generation market size was recorded at USD 1,511.20 billion in 2023, which is estimated to be USD 1,595.40 billion in 2024 and reach USD 2,439.33 billion by 2031, growing at a CAGR of 6.25% from 2024 to 2031.

The shift toward renewable energy, coupled with rising energy demand, is driving growth in the power generation market. Investments in solar, wind, and hydropower projects are increasing as governments prioritize cleaner energy solutions to meet sustainability goals. Technological advancements, such as improved energy storage systems and efficient power generation technologies, are enhancing capacity and reliability.

Furthermore, supportive policies and incentives for renewable energy adoption, along with the modernization of aging infrastructure, are propelling market expansion globally. 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 urbanization and rapid industrialization are significantly driving power demand.

• According to the United Nations, 68% of the global population will reside in urban areas by 2050.

Decentralization of power generation is driving the power generation market. 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 of power generation include fossil fuels like coal, natural gas, and oil, nuclear energy, and renewable sources like wind, solar, hydropower, geothermal, and biomass. Each of these sources undergoes specific processes to transform the raw energy into usable electrical power.

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.

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 (R&D) 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 is also fueled by significant investments in smart grid infrastructure, which promises to enhance the reliability and efficiency of power distribution. Key market 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 power generation market is driven by the growing adoption of grid-energy storage solutions, which are crucial for integrating renewable energy into the power generation mix and enhancing grid stability. As the share of renewable energy sources like solar and wind increases, the need for reliable storage systems, such as Battery Energy Storage Systems (BESS) and Pumped Hydroelectric Storage (PHS), becomes more critical.

These technologies store surplus energy generated during low-demand periods and release it during peak demand or low renewable production, ensuring a consistent power supply. The rising focus on sustainability, energy conservation, and reducing reliance on fossil fuels is fueling global investments in grid storage systems.

• In April 2024, Socomec launched its Energy Storage System (ESS) Grid Lab in Strasbourg, France, aimed at advancing technologies to improve grid resilience and reliability.

Such innovations are accelerating the deployment of grid storage, further driving growth in the power generation market. 

However, grid stability and integration issues represent a significant challenge in modern power generation. Renewable energy, such as wind and solar, is inherently intermittent and variable, which leads to fluctuations in power supply that challenge grid stability.

Traditional grids, designed for steady and predictable inputs from large, centralized power plants, struggle to adapt to the variable output of renewable sources. This results in voltage instability, frequency deviations, and blackouts if not managed properly.

Furthermore, integrating decentralized generation systems and new technologies such as electric vehicles (EVs) 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

The growing shift toward renewable energy sources and hybrid energy systems is driving substantial growth in the power generation market by addressing the increasing demand for sustainable and reliable energy solutions. As governments and industries prioritize carbon reduction, investments in renewable technologies like solar, wind, and tidal power are rapidly expanding.

• In February 2024, Energies PH, Inc., through its affiliate San Bernardino Ocean Power Corp., signed an agreement with Inyanga Marine Energy Group to construct Southeast Asia’s first tidal power plant on Capul Island in Northern Samar, Philippines. The 1 MW facility, powered by Inyanga's HydroWing technology, is set for deployment in late 2025. The plant will be integrated with Capul's existing 750 kW diesel power plant and features a microgrid that combines tidal power, solar PV, and energy storage, providing a sustainable, fossil fuel-free energy solution.

The integration of these sources with advanced energy storage solutions and microgrid systems is enhancing grid stability and efficiency, enabling a more flexible and resilient energy infrastructure. This transition to cleaner energy alternatives is reducing dependence on fossil fuels, fostering innovation, and attracting new investments. Additionally, the development of hybrid systems, which combine multiple renewable technologies, is creating opportunities for market growth.

The increasing integration of renewable energy sources like solar and wind is driving the demand for advanced energy storage solutions in the power generation market. As renewable energy generation is intermittent, with peaks during sunny or windy periods and lulls at night or on calm days, the need for efficient storage systems has become critical.

Advances in battery technologies, such as solid-state batteries, and large-scale energy storage systems are enabling the storage of excess energy when production exceeds demand. This stored energy can then be utilized during peak demand periods or low renewable generation ensuring a reliable and continuous energy supply. These innovations are enhancing grid stability, reducing reliance on fossil fuels, and accelerating the adoption of renewable energy.

• For instance, in March 2024, Korea Western Power Co. (KOWEPO) and EDF Renewables entered a joint development agreement for a 1.5 GW solar farm in Khazna, UAE, highlighting the growing shift toward large-scale renewable projects.

This trend is significantly driving the expansion of the power generation market.

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 share of 70.15% of the power generation market 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 lack of sufficient investment in renewable infrastructure.

Volatility in the global energy market, including fluctuations in oil & gas prices, drives 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 the industrial sector is experiencing robust growth.

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

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, Middle East & Africa, and Latin America.

Asia Pacific accounted for 36.18% share of the global power generation market 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 renewable energy projects.

• In February 2024, Energies PH, Inc., through its affiliate San Bernardino Ocean Power Corp., signed a contract with Inyanga Marine Energy Group to develop Southeast Asia's first tidal power plant on Capul Island, Northern Samar, Philippines. The 1 MW plant, utilizing Inyanga’s HydroWing technology, is set for deployment in late 2025. It will be integrated with the island's existing 750 kW diesel power plant and features a microgrid combining tidal energy, solar photovoltaics (PV), and energy storage, providing a sustainable alternative to fossil fuel-based power generation.

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.

The power generation market in 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 (GHG) emissions and promoting sustainability.

The U.S. and Canada are leading the charge with significant investments in renewable energy infrastructure 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. Furthermore, key players in the region are driving market growth by expanding their product portfolios and pursuing strategic developments.

• In December 2023, Vestas secured an order from Pattern Energy for the SunZia Wind project in New Mexico, U.S. The 1.1 GW order includes 242 V163-4.5 MW turbines, marking it as the largest onshore wind project and the largest global order for Vestas' latest high-capacity turbine model.

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 market 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