Electric Power Generation
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 AES, American Electric Power, Dominion Energy, Duke Energy, Exelon, and Tennessee Valley Authority (all based in the US), along with China Datang Corporation and China Huaneng Group (both based in China), EON (Germany), Inter RAO (Russia), and TEPCO (Japan).
The global electricity industry generates about 25 trillion kilowatt hours (KWh) of electricity. The leading countries in electricity generation are China, the US, India, Russia, and Japan. About 13% of the world's population does not have access to electricity, resulting in an unmet demand that will fuel industry growth in areas like India and Africa.
The US electric power generation industry consists of about 3,300 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $120 billion.
Companies that generate electricity primarily from fossil fuels, nuclear, solar, or wind are covered in separate industry profiles. Companies that transmit and distribute electricity are covered in the Electric Power Transmission, Distribution & Marketing industry profile.
While deregulation has altered power markets in many nations, electric utilities often continue to operate as unofficial monopolies in a given service territory. 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, efficiency, 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 US industry is highly concentrated: the 50 largest companies account for about 80% of revenue.
In the US, the traditional electricity industry consisted of investor-owned utilities, municipal utilities, cooperatives, and government entities that owned the generation, transmission, and retail distribution facilities within a limited area and served all customers within that area as tightly regulated "natural monopolies." Though "natural monopolies" still exist, the electric energy industry underwent a restructuring driven by changes in federal and state laws in the 1990s. In restructured (or deregulated) retail markets, generation, transmission, and distribution operations are carried out by separate companies, and the owners of local distribution lines make their lines available to competitors. The purpose of moving toward a less regulated electricity market was to decrease the cost of electricity by fostering competition among producers. One practical effect was the divestment of generation facilities by many investor-owned utilities.
Despite the popularity of restructuring activities initially, only about 15 states have fully or partly deregulated retail electricity markets. Several other states, including California, launched restructuring initiatives before suspending them, in part because of concerns that restructuring caused electricity rates to rise. Many local electricity generators are still owned by utility holding companies that also own power distribution lines, wholesale transmission lines, and wholesale power trading companies.
Products, Operations & Technology
The primary product of the industry is alternating current (AC) electrical power. Electricity is produced by generators that convert mechanical energy
Sales & Marketing
Finance & Regulation
Regional & International Issues
Also includes the following chapters:
Quarterly Industry Update
Trends and Opportunities
Call Preparation Questions
Glossary of Acronyms