A closer look at the key fuels in global power plants



Fossil fuels

Put simply, fossil fuels form from the remains of plants and animals buried under the Earth’s surface millions of years ago. Coal, natural gas, and oil are the most important fossil fuels. As we discussed in the previous part of this series, fossil fuels are used in thermal power plants to generate electricity.

Fossil fuels are most-used fuel type in electricity generation. In the US, fossil fuels accounted for around a 67% share in electricity generation in 2013, while around 80% of electricity generated in China comes from fossil fuels.

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Fossil fuels (especially coal) are the most polluting fuels for electricity generation. They emit large amounts of CO2 and other pollutants when burned. However, coal is also the cheapest source of energy, available in abundance across the world. Companies like GE Energy (GE) and Siemens AG specialize in manufacturing equipment for thermal power plants.


In nuclear power plants, the heat to generate steam comes from nuclear fission. The steam drives turbines to generate electricity. “Fission” refers to a process where the nucleus of an atom spits into two smaller nuclei, exerting a large amount of energy. Only a few elements—like uranium-235 and plutonium-239—can be used in nuclear reactors. Nuclear power accounts for over a 70% share in electricity generation in France compared to 20% in the US. Companies like GE Energy (GE) and Fluor (FLR) have a presence in this segment.

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“Hydropower” refers to energy generated from flowing or falling water. Dams with electricity generation capabilities are prominent examples of hydroelectric power stations. Hydropower is considered to be a renewable source of electricity, as the water naturally replenishes through rain. China has the largest installed hydropower capacity at over 250 gigawatts, or roughly equivalent to India’s total power generation capacity.

Other renewables

Wind and solar (TAN) are the two most prominent other renewable sources of power. Wind turbines extract energy from flowing wind to generate electricity, while electricity from Sun’s rays are harvested using photovoltaics (or PVs). With a growing quest for cleaner energy and a push from governments for renewable energy, the importance of solar and wind power is growing. FirstSolar (FSLR) and SunPower Energy (SPWR) are two prominent American Solar PV manufacturers. The wind turbine industry is dominated by Vestas (from Denmark), Enercon (from Germany), and Goldwind (from China). Apart from wind and solar, other renewable sources include biomass and geothermal energy (energy stored in the Earth’s crust).


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