United States Thermal Power Market Outlook, Size, Share, Industry Growth 2025–2034

The United States thermal power market reached approximately USD 212.20 million in 2024 and is projected to grow at a CAGR of 1.80% between 2025 and 2034, reaching an estimated value of USD 253.64 million by 2034. Thermal power generation, which primarily involves electricity production from coal, natural gas, and oil, continues to play a pivotal role in the U.S. energy sector despite the nation’s accelerating transition toward renewable energy. While the country is rapidly expanding its renewable capacity, thermal power plants remain indispensable for ensuring grid stability, meeting peak power demands, and supplying base-load energy. The gradual modernization of aging plants, the increasing use of natural gas, and the adoption of carbon reduction technologies are expected to drive moderate but steady growth in this market over the coming decade.

Market Overview

Thermal power remains a foundational component of the U.S. power generation mix. Although renewable energy sources such as wind and solar are expanding rapidly, they often face intermittency issues, necessitating dependable backup sources like thermal power. As of 2024, thermal power accounted for a significant share of total electricity generation in the United States, with natural gas serving as the dominant fuel due to its availability, lower emissions, and cost-effectiveness compared to coal. The U.S. Energy Information Administration (EIA) projects that natural gas will continue to serve as a cornerstone of energy security through 2034.

The modernization of existing power plants and the adoption of advanced combined cycle gas turbine (CCGT) technology are key factors improving the efficiency and sustainability of the U.S. thermal power sector. These plants convert natural gas into electricity with greater efficiency while producing significantly fewer greenhouse gas emissions. Furthermore, efforts to retrofit coal-fired plants with carbon capture, utilization, and storage (CCUS) systems are emerging as a critical step in decarbonizing thermal power without entirely phasing it out.

Market Drivers and Opportunities

One of the most significant drivers of the U.S. thermal power market is the rising and stable electricity demand from industries, commercial establishments, and households. Even as renewable energy grows, the need for reliable, round-the-clock power makes thermal generation a crucial element of the nation’s energy infrastructure. Natural gas, in particular, offers operational flexibility and can ramp up or down quickly to balance the grid during fluctuations in renewable power output.

Another growth driver is technological innovation. Advancements in turbine design, digital monitoring systems, and predictive maintenance tools have enhanced plant efficiency and reduced downtime. Utilities are increasingly investing in automation and artificial intelligence (AI)-driven analytics to optimize operations, forecast maintenance needs, and lower costs. Moreover, federal and state governments are supporting investments in cleaner fossil fuel technologies to achieve long-term climate goals while maintaining energy security.

The ongoing transition from coal to natural gas presents both a challenge and an opportunity. While coal-fired capacity is declining due to environmental concerns and high maintenance costs, the expansion of gas-based plants provides new avenues for investment. The United States is also witnessing growth in cogeneration (combined heat and power) systems that utilize waste heat for industrial or district heating applications, improving overall energy efficiency. Additionally, carbon capture technologies are being integrated into select power plants to reduce emissions and potentially repurpose captured CO₂ for industrial use or underground storage.

Market Trends

Several trends are shaping the future of the U.S. thermal power market. One of the most prominent is the shift toward hybrid power generation systems, which combine thermal energy with renewable sources. These systems enhance reliability by offsetting the intermittency of renewables while ensuring efficient use of natural gas. Many utilities are also focusing on repowering projects, where outdated coal plants are converted into modern gas-fired facilities.

Digitalization is another major trend. The adoption of smart grid technologies, Internet of Things (IoT) sensors, and cloud-based control systems allows operators to monitor plant performance in real time and predict system failures before they occur. Predictive maintenance powered by AI and machine learning is helping reduce costs and extend equipment life.

Furthermore, the integration of low-carbon technologies is becoming a competitive necessity. Companies are actively exploring ways to minimize carbon footprints through advanced combustion processes, bioenergy co-firing, and hydrogen blending with natural gas. These approaches are aligned with national climate objectives and the Biden administration’s commitment to achieving net-zero emissions by 2050.

Competitive Landscape

The U.S. thermal power market features a mix of multinational technology providers, independent power producers, and utility companies. Leading players include General Electric (GE), Siemens Energy, Mitsubishi Power, Duke Energy, Southern Company, and NextEra Energy. These companies are at the forefront of developing high-efficiency turbines, digital plant management systems, and carbon capture solutions.

Strategic partnerships between utilities and equipment manufacturers are becoming more common as companies seek to modernize existing infrastructure. For instance, collaborations aimed at deploying hydrogen-ready turbines and zero-emission gas plants are gaining traction. Utilities such as Duke Energy and Southern Company are investing heavily in upgrading their gas-fired fleets and exploring hybrid models that integrate renewable energy into their generation mix.

Financial institutions and private equity investors are also showing renewed interest in thermal power modernization projects. The long operational lifespan of thermal plants and stable returns make them attractive investment options, particularly when paired with emissions reduction technologies.

Regulatory Environment and Sustainability Initiatives

Environmental regulations play a crucial role in shaping the U.S. thermal power market. The Environmental Protection Agency (EPA) has introduced strict standards for greenhouse gas emissions, mercury control, and water management for thermal plants. These policies are encouraging utilities to transition to cleaner fuels and invest in emission control technologies.

Simultaneously, several federal and state-level incentives are supporting the deployment of low-carbon thermal technologies. Programs promoting CCUS, natural gas infrastructure modernization, and energy efficiency upgrades are providing financial assistance to power producers. These regulatory measures ensure that the transition toward sustainability is balanced with the need for grid reliability and affordable electricity.

Future Outlook

Looking ahead, the United States thermal power market is expected to continue evolving as it adapts to new energy realities. By 2034, the market is projected to reach a value of USD 253.64 million, supported by continued investments in gas-fired generation and clean energy integration. The role of thermal power will gradually shift from being the dominant energy source to serving as a stabilizing force within a diversified energy mix.

Natural gas will remain the leading contributor to thermal generation due to its lower carbon intensity, flexibility, and affordability. However, emerging technologies such as hydrogen co-firing, supercritical CO₂ turbines, and AI-enabled plant optimization are expected to redefine the market landscape. The adoption of these innovations will allow the thermal power sector to operate more sustainably while meeting the nation’s growing energy demand.

In the long term, a balanced approach combining renewables with efficient thermal systems will ensure grid stability and energy reliability across the United States. The government’s focus on net-zero targets will further encourage the modernization of thermal plants, ensuring that the sector remains a critical pillar of the U.S. energy ecosystem through 2034 and beyond.