Analysis of Global Power Market
Analysis of Global Power Market
Entry Barriers
•
Regulation and Qualification Barrier
The government policy and regulation is
normally strict on the power industry and has
corresponding requirements for new entrants.
For example, in the UK, power generation is a
licensable activity and unlicensed power
generation is prohibited. New entrants need to
meet an array of requirements and acquire
power generation license. The examination of
qualifications and approval of licenses typically
takes a long time. It is difficult for new entrants,
who are lack of relevant industry experience to
acquire necessary qualifications for power
industry.
2
Capital Barrier
•
Generally, significant investment of more than US Dollar tens of
millions is required to build up new power plants, including the
cost for plant construction and equipment procurement. The
payback period of power projects is usually long, which
intensifies the requirements on developers' financial strength
and financing capabilities. In addition, it's difficult for new
entrants to obtain financing from banks and other financial
institutions, due to their limited industry track record. Therefore,
the high capital requirement is an important entry barrier in the
global power market.
1
Entry Barriers
•
Technical Barrier
The technical level of electric power companies is key in determining the
quality of electric power system. Stable operation of large-scale power plants
involves a wide range of complex technical expertise and experience.
Technical competence in power system operation can also improve
operational efficiency and reduce the operational cost. New entrants who
lack of technical expertise can hardly compete with existing players with
sophisticated technical expertise.
3
Source: Frost & Sullivan
FROST
& SULLIVAN
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