The global power engineering, procurement, and construction (EPC) market is expected to grow at a CAGR of over 3% during the forecast period. Factors such as the growing electricity generation along with energy consumption demand, with changing power generation industry dynamics, are expected to drive the demand for power EPC market. Moreover, the investments in the power sector, including increased government spending on renewables energy is further expected to bolster the market. However, the phasing out of coal-based power plants, which account for a major share in power generation around the globe and volatile crude oil prices leading to delay in several upstream projects are expected to hinder the growth of the power EPC market.

  • The renewables in the power generation segment are expected to be the fastest-growing segment for power EPC market during the forecast period, owing to decreasing installation and power generation cost from renewables and commitment of several governments to reduce their reliance on fossil fuel-based power generation.
  • With the increasing closures of fossil-fueled generation, an influx of wind, solar, small-hydro, and other renewables-based power generation, rising electric vehicle and heat pump demand, and increasing export requirements via interconnectors have resulted in increased requirements for installation of transmission and distributions (T & D) lines, creating several opportunities for the major power EPC companies.
  • Asia-Pacific is expected to the largest market during the forecast period, owing to high urbanization growth rate and growing electricity demand, mainly from China and India.



Key Market Trends

Renewable Energy for Power Generation Segment to be the Fastest Growing Market

  • In a bid to reduce greenhouse gas (GHGs) emissions and to encourage the production of electricity from cleaner energy sources, several counties have been actively promoting renewables and gas-based power generation. Moreover, the global installed renewable capacity increased from 1,226 GW in 2010 to double to almost 2,536 GW by 2019.
  • According to IEA, on a cost-adjusted basis, investment activity increase was the strongest for solar PV and wind energy for the past five years, which has led to several projects in the pipeline which are expected to be commissioned during the forecast period.
  • Moreover, pledges, such as the pledge to cut-down by 2050 to a ’net-zero’ state, governments policies, such as the establishment of Carbon Tax on thermal power plants and establishment of Contracts for Difference (CFD) mechanism in the United Kingdom, coupled with falling cost of equipment and energy storage systems, are expected to further supplement the demand for renewable energy globally, in turn driving the power EPC market.
  • In India, solar PV spending exceeded that for coal power for the first time in 2018, supported by government policies and actions. Further, in the United States, solar PV and wind investment rose almost 15% in 2018, supported by corporate procurement.
  • Therefore, with increased investment in renewable energy and its advantages over fossil fuels, coupled with upcoming projects, the renewable energy segment is expected to be the fastest growing market during the forecast period.



Asia-pacific to Dominate the Market

  • Asia-Pacific is the regional hotspot for the power EPC market, owing to governmental support, numerous incentives, and national targets. In 2018, the primary consumption reached 5,985 million tonnes of oil equivalent, representing an increase of 4% over the previous year’s level.
  • Many countries in Asia-Pacific have inadequate transmission and distribution (T&D) network and hence, electricity is not available in some of the remote and rural areas. To bring electricity to these areas, the countries in the region are investing heavily in building a transmission line network.
  • According to IEA, in 2018, China was the largest market for power sector investment, supported by increased demand for power in the industrial and commercial sectors. Also, the power transmission and distribution grid of China has been experiencing major upgradations and modifications for making it capable to transmit higher electricity and cope with the future demand.
  • The energy investment in India has grown most rapidly in the past four years, up by more than 10%. In 2019, renewable spending continued to exceed that for fossil fuel-based power, supported by tendering of solar PV and wind projects.
  • Moreover, in India several power projects are in pipeline which are expected to increase the demand for EPC in the region. The coal fired Patratu power project, having a capacity of 4,000 MW has been under construction since 2018 in Jharkhand, India and is expected to be commissioned in 2022.
  • Therefore, based on the factors like expansions and upgradations, especially in Asia-Pacific region, along with increased power demand is expected to have a positive impact on the power EPC market.



Competitive Landscape

The power engineering, procurement, and construction (EPC) market is fragmented. Some of the key players are Fluor Ltd., KBR Inc., Kiewit Corporation, McDermott International Inc, and Bechtel Corporation.

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