Fossil Fuel Electricity Market Overview

The global Fossil Fuel Electricity market values is projected to reach US$ 2,543.82 Billion by 2035 from US$ 1,364.64 Billion in 2025. The market is expected to register a CAGR of 5.4% during 2025–2035. The Global Fossil Fuel Electricity Market forecast growth is driven by rising energy demand, economic expansion, infrastructure development, and evolving policies and regulations. ​

​The global fossil fuel electricity market remains a significant component of the world's energy landscape, even as the transition to renewable energy sources accelerates. In 2024, fossil fuels accounted for approximately 60% of global electricity generation, with coal retaining its position as the dominant fuel in power production.

The Global Fossil Fuel Electricity Market industry refers to the production, distribution, and consumption of electricity generated from fossil fuel sources, including coal, natural gas, and oil. This market encompasses power plants that burn these fuels to produce energy, transmission and distribution networks, and the industries, businesses, and consumers that rely on fossil-fuel-generated electricity.

In 2024, global electricity consumption surged by nearly 1,100 terawatt-hours (TWh), or 4.3%, nearly double the annual average over the past decade. This increase was largely due to extreme weather conditions and the expansion of electrification across various sectors. Among fossil fuels, natural gas experienced the fastest growth, with demand rising by 2.7% in 2024 to reach a new all-time high. This increase was particularly notable in fast-growing Asian markets, with China experiencing growth of over 7% and India over 10%. Despite the growth in natural gas consumption, the overall share of fossil fuels in global electricity generation is projected to decline from 61% in 2023 to 54% in 2026, as clean electricity supply continues to expand rapidly. Over the 2025-2027 forecast period, global carbon dioxide (CO₂) emissions from electricity generation are expected to plateau after increasing by 1% in 2024. This stabilization is due to the expanding use of renewables and a leveling off in fossil fuel-fired generation. Investment in energy supply and natural resources is projected to reach record levels in 2025, with spending exceeding $1.5 trillion, a 6% increase in real terms from 2024. This investment encompasses capital allocation across power and renewables, upstream oil and gas, and metals and mining sectors.

Fossil Fuel Electricity Market Drivers and Opportunities

Rising Global Demand for LNG is anticipated to lift the Fossil Fuel Electricity market growth during the forecast period

​​​​As worldwide energy consumption escalates, fossil fuels particularly coal and natural gas continue to play a pivotal role in meeting this demand. In 2024, global energy demand increased by 2.2%, surpassing the average annual growth rate of 1.3% observed between 2013 and 2023. This acceleration was primarily driven by elevated temperatures led to heightened cooling requirements, contributing to a 4.3% surge in global electricity consumption. Developing economies accounted for over 80% of the increased energy consumption, with notable growth in regions like China and India. ​The surge in global energy demand has significantly influenced the dynamics of the fossil fuel electricity market trends. In 2024, global energy consumption increased by 2.2%, surpassing the average annual growth rate of 1.3% observed between 2013 and 2023. This uptick was primarily driven by a 4.3% rise in electricity demand, nearly double the previous decade's average. Factors contributing to this increase include extreme weather conditions necessitating higher cooling needs, industrial expansion, and the proliferation of data centers and artificial intelligence applications. Emerging and developing economies accounted for over 80% of this growth, with advanced economies also experiencing a reversal of previous declines, registering nearly a 1% increase in energy demand. Despite the accelerated adoption of renewable energy sources, fossil fuels, particularly natural gas and coal, continued to play a substantial role in meeting the heightened electricity demand. Natural gas demand rose by 2.7% (115 billion cubic meters), marking its most significant increase among fossil fuels in 2024. Coal consumption also saw a 1% rise, largely due to intensified cooling requirements during heatwaves in China and India. Looking ahead, the International Energy Agency (IEA) projects that global electricity demand will grow at an average annual rate of nearly 4% through 2027. This growth is expected to be driven by increased electrification in transportation, heating, and industrial sectors, as well as the expanding needs of data centers. China is anticipated to lead this surge with an estimated 6% annual increase in electricity consumption. In the United States, the projected growth equates to adding the current electricity consumption of California by 2027. Conversely, the European Union is expected to experience more modest growth, returning to 2021 consumption levels by 2027. The rising global energy demand continues to exert pressure on the fossil fuel electricity market growth.

Government Policies & Subsidies is a vital driver for influencing the growth of the global Fossil Fuel Electricity market

​​​​​Government policies and subsidies play a pivotal role in shaping the global fossil fuel electricity market. By providing financial support to fossil fuel production and consumption, these interventions can influence energy prices, investment decisions, and the overall energy mix.  In 2022, global support for fossil fuels reached unprecedented levels. The Organisation for Economic Co-operation and Development (OECD) and the International Energy Agency (IEA) reported that the fiscal cost of government support measures for fossil fuels across 82 economies nearly doubled from the previous year, totaling approximately USD 1.48 trillion. This surge was primarily a response to soaring energy prices, driven in part by geopolitical tensions such as Russia's invasion of Ukraine. Breaking down this support, the IEA estimated that fossil fuel consumption subsidies—instances where consumer prices are lower than market values—amounted to over USD 1.1 trillion in 2022. Specifically, subsidies for natural gas and electricity consumption more than doubled compared to 2021, while oil subsidies increased by around 85%. These subsidies were predominantly concentrated in emerging markets and developing economies, with more than half occurring in fossil fuel-exporting countries. Such substantial subsidies have direct implications for the fossil fuel electricity market. By artificially lowering the cost of fossil fuels, governments inadvertently encourage their continued use in electricity generation. This financial support can deter investments in renewable energy sources, as fossil fuel-based electricity remains economically attractive. Consequently, the transition to cleaner energy alternatives may be delayed, and greenhouse gas emissions could persist at higher levels. The distribution and impact of these subsidies vary across regions. For instance, in developing countries, over £494 billion ($650 billion) in public subsidies are allocated annually to fossil fuel companies and other industries harmful to the climate. This amount significantly outweighs the climate finance provided to these nations, hindering their transition to low-carbon economies. Renewable energy projects in these regions receive 40 times less funding than the fossil fuel sector, highlighting a substantial imbalance in financial support. In response to the environmental and economic challenges posed by fossil fuel subsidies, international efforts have been initiated to reform these policies. At the United Nations' COP29 climate summit in Baku, discussions emphasized the need to reduce distortions and inefficiencies created by such subsidies. Despite longstanding calls for phasing out inefficient fossil fuel subsidies, progress remains slow, with some regions like the European Union and countries such as India and Morocco making notable strides.

Technological Advancements in Fossil Fuel Power Generation is poised to create significant opportunities in the global Fossil Fuel Electricity market

​​​​​Technological advancements in fossil fuel power generation are poised to create significant opportunities for the global fossil fuel electricity market during the forecast period. Innovations aimed at enhancing efficiency, reducing emissions, and integrating carbon capture technologies are revitalizing fossil fuel-based power generation. These developments are particularly relevant given the increasing global energy demand, driven by sectors such as data centers and artificial intelligence. Modern combined cycle power plants (CCPPs) have achieved remarkable efficiency improvements by integrating gas and steam turbines. By utilizing the high-temperature exhaust gases from gas turbines to produce steam that drives steam turbines, these plants can achieve efficiencies exceeding 60%. For instance, the Bouchain power plant in France, equipped with General Electric's 9HA gas turbine, has been certified by Guinness World Records as the world's most efficient combined cycle power plant, with an efficiency of 62.22%. Additionally, repowering existing coal-fired plants by replacing aging boilers with advanced gas turbines and heat recovery steam generators (HRSGs) can elevate plant efficiency to between 40% and 50%. This approach not only extends the operational life of power plants but also reduces fuel consumption and lowers emissions. Developments in gas turbine technology have led to higher efficiency levels and lower emissions in natural gas-fired power plants. Combined-cycle gas turbines (CCGTs), for instance, utilize both gas and steam turbines to generate more electricity from the same fuel input.

Fossil Fuel Electricity Market Scope

Fossil Fuel Electricity Market Report Segmentation Analysis

The Global Fossil Fuel Electricity Market industry analysis is segmented into by Fuel Type, By Technology, by Application, by End-user and by Region.

The Coal-based Power Generation segment is anticipated to hold the highest share of the global Fossil Fuel Electricity market during the projected timeframe.

By Fuel Type, the Fossil Fuel Electricity market is segmented into Coal-based Power Generation, Natural Gas-based Power Generation and Oil-based Power Generation. Coal-based Power Generation segment dominates the global Fossil Fuel Electricity market share expected to hold around 35% in 2025. In regions like the Asia-Pacific, coal remains the primary energy source, contributing 54.8% to electricity generation. This reliance is driven by abundant coal reserves and established infrastructure. However, Natural gas is often viewed as a cleaner alternative to coal, emitting approximately 50% less CO₂. Its flexibility and efficiency make it a preferred choice for balancing grids with variable renewable energy inputs. In the Americas, natural gas leads the electricity mix, accounting for 35.5% of generation, reflecting the region's substantial natural gas production and infrastructure.

The Steam Turbine segment is anticipated to hold the highest share of the market over the forecast period.

On the basis of Technology, the market is bifurcated into Steam Turbine, Gas Turbine, Combined Cycle and Others. Steam turbine is a traditional technology primarily used in coal-fired and some oil-fired power plants. These systems generate electricity by converting water into steam to drive turbines. Regions with abundant coal reserves, such as China and India, continue to rely on steam turbine technology for electricity generation. Many existing power plants utilize steam turbines, leading to sustained usage despite environmental concerns. However, the trend is shifting towards more efficient technologies like gas turbines and combined cycle systems, driven by environmental considerations and the pursuit of operational efficiency.

The Industrial segment dominated the market in 2024 and is predicted to grow at the highest CAGR over the forecast period.

In terms of End-user, the Fossil Fuel Electricity market is segmented into Utilities, Industrial, Commercial, and Residential. Industrial sector remains the largest consumer of electricity globally, followed by the residential and commercial sectors. Industries such as manufacturing, mining, and construction require substantial energy for operations, often relying on fossil fuel-based electricity due to its availability and established infrastructure. Certain industrial processes necessitate consistent and high-intensity energy inputs, which fossil fuel power plants can provide reliably.

The following segments are part of an in-depth analysis of the global Fossil Fuel Electricity market:

Fossil Fuel Electricity Market Share Analysis by Region

Asia Pacific is projected to hold the largest share of the global Fossil Fuel Electricity market over the forecast period.

In 2024, Asia Pacific dominated the Fossil Fuel Electricity market, accounting for approximately 45% of the global Fossil Fuel Electricity market share. The Asia-Pacific region exhibits a diverse reliance on fossil fuels for electricity generation, with significant variations across countries. In 2023, over 95% of Bangladesh's electricity was generated from fossil fuels. This heavy dependence is primarily due to the country's limited renewable energy infrastructure and the immediate availability of fossil fuel resources to meet its growing energy demands. ​Similarly, Singapore's electricity generation in 2023 relied on fossil fuels for more than 95% of its output. The nation predominantly uses natural gas, which accounted for 95% of its electricity production in 2025. Singapore's limited land area constrains the development of alternative energy sources, reinforcing its reliance on imported natural gas. ​ China remains a major consumer of coal for electricity generation. In 2023, the country commissioned 47.4 gigawatts (GW) of new coal plants, accounting for about two-thirds of the global increase in coal capacity. This expansion underscores China's ongoing dependence on coal to meet its substantial energy needs, despite efforts to diversify its energy mix. ​ India continues to rely heavily on coal for electricity generation. The country is projected to experience an 80% growth in nuclear electricity generation over the next two years, indicating efforts to diversify its energy sources. However, coal remains a significant component of India's energy strategy due to its abundance and cost-effectiveness. South Korea has made notable strides in reducing its reliance on fossil fuels. In the first quarter of 2025, the country reduced fossil fuel imports by 20% compared to the previous year, primarily due to increased nuclear power production. In January 2025, nuclear energy accounted for nearly 35% of South Korea's electricity, surpassing coal and gas. This shift highlights South Korea's commitment to enhancing energy security and reducing carbon emissions through nuclear energy.​

Fossil Fuel Electricity Market Competition Landscape Analysis

​The global fossil fuel electricity market is a complex and dynamic sector, influenced by a myriad of factors including regional energy demands, technological advancements, environmental policies, and the strategic initiatives of key industry players.

Global Fossil Fuel Electricity Market Recent Developments News:

Constellation Energy's Acquisition of Calpine Corporation: In February 2025, Constellation Energy announced plans to acquire Calpine Corporation for approximately $26.6 billion. This merger is set to create the largest independent power producer in North America, combining Constellation's nuclear capabilities with Calpine's natural gas and geothermal assets, resulting in a combined capacity of nearly 60 gigawatts.

Shell's Acquisition of Rhode Island Combined-Cycle Power Plant: In January 2025, Shell Energy North America completed the acquisition of RISEC Holdings, LLC, which owns a 609-megawatt combined-cycle gas turbine power plant in Rhode Island. This move secures Shell's long-term supply and capacity in the ISO New England power market, aligning with anticipated increases in regional power demand due to decarbonization efforts.

NRG Energy's Collaboration with GE Vernova and Kiewit Corporation: In February 2025, NRG Energy Inc. partnered with GE Vernova Inc. and Kiewit Corp. to construct four natural gas electricity plants in Texas. This initiative is designed to meet the increasing power demands driven by the expansion of data centers and artificial intelligence applications, with the first plant expected to be operational by 2029.

The Global Fossil Fuel Electricity Market is dominated by a few large companies, such as

·         ExxonMobil Corporation

·         BP plc

·         Royal Dutch Shell plc

·         Chevron Corporation

·         TotalEnergies SE

·         Saudi Arabian Oil Company (Saudi Aramco)

·         Gazprom OAO

·         China National Petroleum Corporation (PetroChina)

·         Enel SpA

·         Engie SA

·         NTPC Limited

·         Duke Energy Corporation

·         Southern Company

·         RWE AG

·         Eskom Holdings SOC Ltd

·         Others