Fossil Fuel Electricity Market Size, Share, and Industry Analysis, By Source (Coal, Natural Gas, and Oil), By End-Use (Industrial, Commercial, and Residential), and Regional Forecast, 2025-2032

Fossil fuels-based electricity is an inexpensive method of generating electricity. Coal, oil, and gas are some of the most important natural resources used in the production of energy. These fossil fuels are all hydrocarbons, compounds formed from carbon and hydrogen. Fossil fuel-based energy has been a fundamental driver of the social, economic, technological, and development progress that has followed globally. Using fossil fuels is an inexpensive method of generating electricity since fossil fuels have high energy density and are easy to access, extract, and transport for electricity production. Despite the various efforts to reduce fossil fuel consumption and the strong growth of renewables over the last few decades, fossil-based fuels remain dominant globally. Their use for electricity generation continues to increase in both absolute and relative terms.

• According to the International Energy Agency, over 60% of global electricity generated in 2023 was produced by fossil fuels. Among fossil fuels, coal-generated electricity accounted for the major share, followed by natural gas. Over 36% of global electricity came from coal-fired power stations, and natural gas accounted for 22.6% of total electricity generation so far this year. In terms of actual generation, coal-fired electricity output hit a new high of 837.7 terawatt hours (TWh) through August, up 0.6% from the same period in 2022.

Fossil fuel power plants burn coal or oil to produce heat, which is used to generate steam to drive turbines, which generate electricity. In gas plants, hot gases drive a turbine to generate electricity, whereas a combined cycle gas turbine (CCGT) plant uses a steam generator to increase the amount of electricity produced. These plants generate power and electricity reliably over long periods and are generally cheaper to build compared to non-renewable power plants. However, burning carbon-based fuels produces large amounts of carbon dioxide, which drives climate change. These plants also produce other pollutants, such as oxides of sulfur and nitrogen, which cause acid rain.

The halt in the supply chain due to the COVID-19 pandemic caused a delay in fossil fuel for electricity generation. Meanwhile, demand and prices were reduced, and investment in this sector also got impacted as consumer spending on oil and gas fell drastically. According to IEA, almost all investment activity was disrupted as a result of restrictions on the movement of people, goods, and equipment. Overall, the impact of the COVID-19 pandemic on the fossil fuel electricity market was negative.

KEY INSIGHTS

The report covers the following key insights:

• Recent Advancements in the Fossil Fuel Electricity Market
• Key Industry Trends
• Regulatory Landscape for the Fossil Fuel Electricity Market
• Key Industry Developments (Mergers, Acquisitions, and Partnerships)
• Impact of COVID-19 on the Market

SEGMENTATION

ANALYSIS BY SOURCE

Based on source, the market is segmented into coal, natural gas, and oil. Coal is the dominant segment in the market by source since it is the most abundant source of electricity globally, providing the maximum share of global electricity production. Coal-fired electricity plants provide affordable, reliable, and constant power that is available on demand to meet energy consumption needs.

Natural gas is the second leading segment by type. Natural gas power plants are cost-effective to set up and have low maintenance. It also has very high thermodynamic efficiencies compared to other power plants. Burning of natural gas produces fewer pollutants, such as NOx, SOx, and particulate matter, than coal and oil, which is expected to impact the market positively over the forecast period. Similarly, electricity is produced from petroleum-based oil, which does not hold a major share globally but is prevalent in some countries.

ANALYSIS BY END-USE

Based on the end-use, the market is segmented into industrial, commercial, and residential. The industrial sector uses electricity to produce heat in industrial processes, boiler fuel to generate steam or hot water for process heating and generating electricity, and others. Within the industrial sector, manufacturing accounts for the largest share of annual industrial electricity consumption, followed by mining, construction, and agriculture. Most industries use fossil fuel-generated electricity as it is a cheaper source of power. The commercial segment consists of a variety of facilities and equipment that consume electricity, including those found in the business sector. The residential sector is mostly dependent on fossil fuel-based electricity to power numerous home devices and equipment, which is expected to improve the demand.

REGIONAL ANALYSIS

The fossil fuel electricity market has been studied across North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa.

Asia Pacific dominates the fossil fuel electricity market as China is the region's industrial powerhouse and is increasingly investing in infrastructure development for power and electricity production. North America follows Asia in the growth of the Fossil Fuel Electricity industry. The U.S. Energy Information Administration estimates that in 2023, about 4,178 billion kWh of electricity was generated at utility-scale electricity generation facilities in the U.S. About 60% of this electricity generation was from fossil fuels. In Europe, over two-thirds of primary energy consumption in the EU is still derived from fossil fuels. Electricity production in the EU is getting greener every year, and the share of renewable energy is increasing. It will continue to grow in the coming years with respect to its global climate-related targets by 2050. In Latin America, fossil fuels account for over two-thirds of the region's energy mix. From Mexico to Argentina, governments continue to develop new oil and gas projects for the upcoming decades, both for domestic use and for exports.

KEY PLAYERS COVERED

The report includes profiles of key players, such as Iberdrola, Huaneng Power International, Engie SA, Enel Group, State Power Investment Corporation (SPIC), AGL Energy Ltd., Origin Energy, Energy Australia, Stanwell Corporation, and American Electric Power (AEP).

KEY INDUSTRY DEVELOPMENTS

In February 2024, EnergyAustralia opened the Tallawarra B gas-fired power station at USD 300 million. Tallawarra B, a fast-start 320 MW gas-fired power station, provides the New South Wales electricity system with a major new flexible capacity asset supporting system reliability.