The global captive power generation market is expected to grow due to the mushrooming power demand in emerging markets of China, India, and the Middle East along with the presence of cross-subsidized charges to the per-unit power generation cost. Increasing population, industrialization, and urbanization are expected to augment captive power generation industry growth. The advantages of captive power generation include reduced distribution and transmission losses, and higher thermal efficiency. Increasing demand for uninterrupted and reliable power is expected to have a positive impact on the market over the next seven years. The declining production output of crude oil and natural gas in the Middle East is expected to decrease the availability of feedstock for the power grid and is expected to amplify the importance of captive power generation over the forecast period. Rising expenditure on hydraulic fracturing has resulted in increasing the production output of shale gas and tight oil in the U.S. which is expected to ensure fuel access to power grid distribution and pose a challenging threat to the captive power generation market.
The industrial sector is one of the largest markets, consuming power, and is likely to contribute to the growth of the market over the next seven years. Competitiveness of the market is significantly impacted by the nonavailability, reliability of grid power, and poor quality of the power in the industry which led the industrial sector to move to captive power generation. Increasing demand for metals, chemicals, and cement on account of the rising application of construction, automotive, and electronics industries is expected to promote the captive power generation market over the next seven years. The government of India, under its power generation policy 2009, supports various captive power generation projects by providing them linkages to support infrastructure, helping the industries in obtaining clearances, arranging for water supply, and paving the way for the captive generation market to witness growth. Therefore, regulatory inclination in India towards promoting captive power generation is expected to favor market growth in the near future.
The global captive power generation market can be segmented on the basis of equipment technology, application, and geography. Majorly used equipment for captive power generation includes heat exchangers, boilers, transformers, generators, and turbines. Governments of numerous countries including the U.S., Japan, and Germany are focusing on power generation through renewable sources such as wind, solar and geothermal on account of reducing reliance on conventional sources such as coal and natural gas. This regulatory inclination to deploy renewable sources for power generation is expected to pose a challenging threat over the forecast period.
High consumption of electricity in utility for steel manufacturing plants has forced manufacturers to establish captive power generation plants in the vicinity. The burgeoning rise in electricity prices in aluminum manufacturing has played an important role in increasing the importance of captive power generation. Mining industry growth in Chile and Peru in light of increasing mergers & acquisitions in the domestic metal sector coupled with favorable government support to promote foreign investments is expected to have a positive impact on the captive power generation market over the next seven years. The growing popularity of solar captive power generation in light of regulatory inclination in Germany and Mexico to promote solar energy output is expected to open new markets in the near future.
Asia Pacific is expected to remain one of the largest markets for captive power generation in light of the robust manufacturing base of aluminum, steel, and copper in China and India. Expansion of petrochemical refining capacity in the Middle East on account of regulatory inclination to augment manufacturing sector output to cater to growing domestic demand in automotive and construction applications is expected to fuel the captive power generation market in the near future. The government of Mexico announced National Infrastructure Plan (NIP) from 2014 to 2018, intended for improving construction industry growth in the energy, construction, and transportation sectors. This policy is expected to increase the importance of captive power generation over the next seven years. Some of the major players in the captive power generation market are Wartsila, GE, Welspun Group, Reliance Industries, Vedanta Resources, Essar Energy, Jindal Power & Steel Ltd., and Ultratech Cement Limited. In 2014, Ultratech Cement Ltd. announced the expansion of its captive power plant in light of increasing power tariffs by the state governments of India.
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