The major sub-industries of the global power equipment industry

The power generation equipment industry is made up of various sub-industries, each with a structure of its own. There are a few integrated players with capabilities across various functions of a power plant (boiler, turbine, and generator) as well as various fuel types. These players include GE Energy (GE), Siemens AG, and Mitsubishi Heavy Electricals. Some players, such as Vestas and GoldWind, specialize in wind power (FAN). Others, such as FirstSolar (FSLR), focus on solar power (TAN). Some companies, such as Fluor (FLR) and KBR (KBR), specialize in engineering and the construction of power plants. At the lower end (smaller projects), the industry is more fragmented, as the technical and capital requirements for such projects are low.

While technical requirements for power plants are high and plant-specific, the transmission and distribution businesses offer no great differentiation. Moreover, the capital requirements for running a transmission line company are low. As a result, the transmission and distribution lines sub-industry is fragmented with a few organized players and a large number of small and localized players. The organized players often have a presence across the construction and engineering industry. Prominent companies operating in this space are Betchel Group and Fluor.

Storing electricity is costly. As a result, almost all of the produced electricity is transmitted to an electrical grid. In simple terms, a grid connects power producers to customers through transmission and distribution lines. However, it’s not as easy as it seems. There are hundreds of power plants serving millions of households and businesses. To make the matter complex, demand for electricity is highly volatile, depending on weather and even times of day. Automation and precision components help in avoiding loss of electricity during transmission and in ensuring accuracy in billing. A few companies, like Schneider Electric, ABB (ABB), Eaton (ETN), and Emerson Electric (EMR), dominate this space.

With this background established, let’s get into the design and competitive landscape of coal-fired power plants in the next part of this series.