How Do Policy Changes Manipulate the Power Equipment Generation Industry?

Highlights:

• Introduction
• Enhanced grid infrastructure and flexible power generation
• High-efficiency technologies upgrading existing assets
• Distributed generation and digital technologies

Energy policies form the course of the power generation equipment industry. This dynamic nature of policy changes deeply impacts how power generation equipment is developed, used, and demanded.  One of the most important global changes in energy policy is the shift toward renewable energy sources. Governments are targeting to reduce greenhouse gas emissions and increase the share of renewables in the energy mix.

Enhanced grid infrastructure and flexible power generation

Energy policies are focusing on electrification across various sectors, including transportation and heating. Electric vehicles are becoming popular due to government incentives and regulations aimed at reducing emissions. One prominent example of a government incentive scheme for electric vehicles is the U.S. Federal EV Tax Credit. Under this scheme, buyers of qualifying electric vehicles can receive a tax credit of up to $7,500. It is designed to reduce the upfront cost of EVs and encourage adoption by making them more financially accessible. In addition to promoting electric vehicles, there is an emphasis on implementing more electric heating systems in homes and businesses. This implies upgradation of infrastructure, like expanding power lines and distribution networks, and using smart grid technologies to make the system more efficient and reliable. To accommodate fluctuating demand and supply from renewable sources, flexible power generation equipment is becoming essential.

Germany’s Energiewende (energy transition) policy is a prime example of how shifts in energy policy can drive demand for power generation equipment. It emphasizes a transition to renewable energy, energy efficiency, and reduced greenhouse gas emissions. As a result, there has been significant investment in wind and solar technologies, as well as energy storage solutions.

In the U.S., the shale revolution has influenced energy policies and the power generation equipment industry. The rise in natural gas production from shale deposits has led to increased use of gas turbines and combined cycle power plants. The country has experienced a shift from coal-fired power plants to more efficient and cleaner natural gas facilities, driven by policies that promote lower carbon emissions and energy independence. The Gas Turbine World report indicates that the global market for gas turbines is projected to grow at a CAGR of 4.1% from 2021 to 2026. The turbine and engines segment is thus expected to hold a major share in the global power generation equipment industry from 2023 to 2032.

China’s energy policies focus on expanding clean energy sources and reducing reliance on coal. The country has invested heavily in solar and wind power, becoming a global leader in these technologies. The demand for power generation equipment has surged, with Chinese manufacturers becoming key players in the global market for solar panels and wind turbines.

High-efficiency technologies upgrading existing assets

 Energy policies now prioritize energy efficiency, focusing on reducing energy consumption and lowering operational costs. Policies such as the U.S. Energy Independence and Security Act and the EU Energy Efficiency Directive establish standards and provide incentives for improving energy efficacy across industries. There is a growing demand for highly competent power generation equipment, including advanced gas turbines, combined cycle power plants, and boilers. According to the International Energy Agency, such improvements have the potential to reduce global energy consumption by up to 30% by 2040.

Additionally, there is an increased focus on upgrading existing power generation equipment, which includes enhancing the effectiveness of coal-fired power plants with technologies like carbon capture and storage and upgrading older gas turbines to meet modern standards. In 2023, GE announced a partnership with the U.S. Department of Energy to develop and implement next-generation turbine systems that significantly reduce emissions, aligning with the broader goals of improving energy performance in power generation.

Distributed generation accompanied by digital technologies

Energy policies are increasingly supporting decentralized energy systems, which allow for localized power generation and consumption. Technologies such as small-scale solar panels, microturbines, and combined heat and power systems are gaining popularity. Distributed generation allows for local power production, reducing reliance on centralized power plants. The rise of decentralized energy systems is accompanied by the integration of digital technologies like advanced metering infrastructure and energy management systems. These technologies enable better monitoring, control, and optimization of distributed energy resources. In 2022, Siemens partnered with PG&E to deploy advanced metering infrastructure and smart grid technologies that enhance the monitoring, control, and maximum distributed energy resources. The partnership aimed to improve grid reliability and energy efficiency by utilizing digital tools to manage the increasing complexity of decentralized energy networks.

Final lines

Changes in energy policy are reforming the power generation equipment industry. The overarching direction reflects that the power generation equipment industry is moving toward more sustainable, efficient, and flexible solutions, constantly adapting to frequently changing policies and regulations. This not only promises to enhance how we generate and use energy but also sets the stage for an environmentally friendly energy future.

To understand and identify trends in the power generation equipment industry and its upcoming prospects, reach out to our in-house experts now!

Related Post