Energy & Power Market Research
The Energy & Power Market includes high-value products that are produced in small quantities. They are sold based on functionality. Fine chemicals on the contrary include chemicals based on formulations and they make use of specialty chemicals as their starting material. These products are temperature and pressure sensitive thus the process, as well as storage conditions, need to be adhered to accordingly.
The energy & power sector is a significant enabler for industries and households to carry out their daily operations. Energy & Power market has witnessed crucial transformations in the past decade. A tectonic shift towards renewables was observed and was accelerated by the Paris agreement, signed in the year 2015. Developed and developing economies have taken transformative steps to reduce emissions and nudge the industries towards carbon neutrality. The developed regions such as North America and Europe have a greater role to play in the entire value chain. These regions are expected to provide the necessary funds and infrastructure to the developing countries to accomplish their sustainable objectives.
Total investments in the global energy market exceeded USD 679 billion in the year 2019. The fossil fuel power investment was recorded as USD 111 billion which is translated as a share of 16.3%. Investment in the renewable energy market was the highest at USD 281 billion or 41.3% of the global energy market’s total investment. Electricity networks are widely used to develop the national electricity market of different economies. The investment in electricity networks was only second to renewables at USD 248 billion or 36.5% of the global energy market’s total investment.
Government policies and initiatives play a crucial role in shaping the global energy and power industry. According to the Western Energy Institute, over 95% of power investments are incentivized by regulations and contracts. Fossil fuel-based generation is considered to be more exposed towards less investment. This is due to lower demand and electricity prices have created less need for new capacities to be installed and de-pressurize the profit margins. A greater share was observed solely in the renewables sector during the lockdown phase. This was due to low operating costs and priority access to networks. Nevertheless, a report published by the International Renewable Energy Agency (IRENA), renewable energy needs to be scaled up at least six times faster for the world to start to meet the goals set out in the Paris Agreement.
A decarbonized power sector is dominated by renewable sources and is at the core of the transition to a sustainable energy future. According to IRENA, the power sector’s renewable energy constituted a share of 25% in the year 2017 and is expected to reach 85% by the year 2050. Electric Vehicles (EVs) and heat pumps are expected to drive the change in renewables. In the year 2017, the power sector integrated 167 gigawatts (GW) of renewable energy capacity globally. This resulted in an average of 8% per year since 2010.
North American Energy & Power Market
An estimated USD 57.8 billion or 16% of the region’s capital expenditure (CAPEX) was directed towards the development of the energy & power market in the year 2020. The solar PV and onshore wind verticals have witnessed negative impacts and positive growth was observed for offshore wind projects in this region. Major US-based utility companies were able to maintain financial resilience in the year 2020 and showcased increased profits for Q1 2020. This was due to increased spending on the establishment of robust grid networks and continued operations to provide energy & power to major industries and households during the lockdown period.
The U.S.A underwent a series of political turbulence and emerged stronger as President Joe Biden re-entered the Paris Agreement in the year 2021. This has projected an optimistic picture for the renewable sector in the global energy & power market. Key policies and discussions with different economies are aimed to strengthen the green energy initiative. The largest US-based solar PV project (690 MW) was approved in May 2020. The project includes a 380 MW battery storage system to power major areas in the United States. Battery-operated vehicles have acted as another catalyst. Major automotive companies in the U.S have set the target to be completely electric by the year 2030.
The government in the U.S has also signaled a post-2020 extension of tax credit eligibility. This scheme is applicable for new solar and wind projects, to help account for delays. According to the latest figures, Q1 wind installations for the year 2020 increased two times as compared to Q1 2019. There was increased spending on wind power in the United States. The sector has witnessed fast growth given favorable resources, policies, and demand from corporate power purchase agreements. The region also witnessed a net reduction of 16.5 GW for coal-fired plants. Greater consumer awareness and demand for green products have supported the changes in this region. More citizens are now well informed and consume products that are in tandem with their core values. This has allowed the major firms to reimagine their core products and provide a holistic experience to the consumer.
European Energy & Power Market
The region has experienced robust growth in the global energy & power market. The region has allocated USD 51 billion or 32% of the regional capital expenditure in the year 2020 towards the utility sector. Europe is regarded as the hub for the automotive industry. Major players in the market have invested in the renewable energy vertical to boost the growth of carbon neutrality. The COVID-19 induced pandemic presented several challenges for the energy and power sector. The overall supply chain was disrupted which led to delay in orders and investment cycles of manufacturers. The smaller players in the market were affected the most in this region. France, Germany, Italy, Portugal, Denmark, and the Netherlands have invested a significant amount of capital in the energy sector.
Major initiatives taken up by the government of different geographies include extended deadlines for commissioning of generation projects. Some large-scale renewables auctions were postponed due to the impact caused by the pandemic. Several utility companies so far maintained spending plans before the crisis, in some cases budgets were reported 10% higher than 2019. Major players in the market also reported improved Q1 profits for the year 2020. This is due to the continuous operations permitted by the government to sustain the functionalities of several industries and households. Local players raised the funds via debt issuances, particularly from green bonds. Despite major lockdowns, construction has continued in many countries, and some large solar PV and offshore wind projects in Spain and the United Kingdom came online in the first four months of 2020.
Corporate buying in this region improved significantly, investment in distributed solar PV and battery storage power energy comprised half of the total spend in these technologies. Nuclear power investment witnessed high growth in this region. Several projects started construction in the year 2018 and four additional ones joined the ranks in the year 2019. This was regarded as an important driver for growth in the European region. The two reactors in Hinkley Point started the construction during the following period. The Hinkley Point nuclear power station is a project to construct a 3,200 MWe nuclear power station with two EPR reactors in Somerset, England. The estimated cost of the entire project is EUR 23 billion.
APAC Energy & Power Market
The State Grid Corporation of China revised the investment towards USD 68 billion for the year 2020. The power investment in China, the world’s largest market is set to expand its upward trend for the year 2020. Major activities in the sector were resumed In April 2020. Several companies in China reported an increase in year-over-year profits. The countries in this region have outlined several sustainable goals to achieve carbon neutrality. This has resulted in lower capital expenditure towards coal-based sources. Several regions in APAC got a green light for construction and 8 GW of wind power in March 2020. Renewable power constituted a greater share in the total investment in the energy & power market.
The Indian government has taken measures to buffer the investment shocks. This included extensions for project commissioning, maintenance of established renewable projects, and boosted the incentives for private companies. China which is regarded as a major supplier of equipment was affected in Q1 2020. The operational activity accelerated in the next quarters. In countries like India and other South Asian regions experienced greater stress in electrical grids as the supply was dependent on state-owned entities.
The China Electricity Council announced that Q1 investment of major power companies increased 0.3% year-on-year despite being the victim of the largest demand in a reduction in Q1 2020. The public utility State Grid of China has accounted for around a third of the electricity in the region. They have focused their investments on ultra-high voltage (UHV) projects which have accounted for 40% of the total investment. China contributed towards 63% of the total solar PV module shipments in the year 2019. Followed by Malaysia at 12% and Vietnam at 8% in the APAC region.
The Ministry of New and Renewable Energy (MNRE) confirmed extensions for the duration of the lockdown phase in addition to 30 days for several renewable projects. Different state governments have permitted payment delays for consumers in electricity bills. On 16th April 2020, a tender for a 2 GW solar PV project, for the price of USD 34/MWh. In July 2020, India established Asia’s largest solar power plant named Rewa solar power plant. The project has a capacity of 750 megawatts and is located on a 500-hectare plot inside a 1,500-hectare solar park.
Middle East Energy & Power Market
The energy sector represents 40% of the Arab region’s GDP. The region’s electricity consumption growth rate has increased at a CAGR of 4.5%. The Arab region has witnessed a huge influx of energy demand from growing energy-intensive urban industrial cities. A significant portion is because of water desalination plants. The countries in this region have experienced the world’s fastest rates of energy consumption per capita.
Abu Dhabi announced a record low price of USD 13.5/MWh for a 2 GW solar PV plant. Major restraints were observed in Iraq, it deferred its capital expenditure budget given low oil prices. This put the risk at 7 GW generation expansion and 1.7 GW renewables projects. The positive market outlook is contributed by electric vehicles and increased investments in research & development activities.
The region has recognized the socio-economic benefits of renewable energy deployment, this is regarded as an important opportunity in this region. According to major research reports, the total investment in clean energy is expected to exceed USD 300 billion by the year 2050 which is expected to contribute towards 90 GW of renewable projects. The United Arab Emirates (UAE) has commanded a larger share in the renewable energy market to shift the dependence from oil-based energy sources.
ROW Energy & Power Market
The electricity sector in Brazil is considered the biggest contributor in South America. The reported capacity in the year 2016 was 150,338 MW. Brazil has the largest capacity for water storage globally. Hydroelectricity met over 70% of the country grid supply. The national grid transmits at 60Hz and is powered 80% from renewable sources. Furthermore, the Brazilian Ministry of Energy has decided to generate 50% of future supplies from hydropower, 30% from wind and biomass, and 20% from gas and other sources.
The North African region is significantly dependent on gas-filled sources. Focus on alternate energy sources and the initiatives taken by the government has resulted in the decline of 20% in annual investments in gas-field energy sources. The auctions related to transmissions and large-scale renewable projects were postponed in Brazil due to the impact of the COVID-19 pandemic. In the same year of 2020, Mexico’s system operator banned renewable energy projects from tests.