Forecast International’s analysis “The Market for Gas Turbine Electric Power Generation” projects that sales of power generation gas turbines from 2017-2026 will grow 6.6 percent over sales during the period 2016-2025. The value of sales of gas turbines in this class will total $112.11 billion over this timeframe.
“The utility and industrial power generation market will continue to provide a strong stimulus for the production of gas turbine machines,” said Forecast International’s Senior Industrial and Marine Gas Turbine Editor Stuart Slade. “Much of that production will go into combined-cycle and/or cogeneration facilities and systems.”
Clouds on the horizon are casting shadows on this market, however. The Forecast International study projects a market for 1,187 power generation gas turbines whose output exceeds 100 MW. This implies average sales of 118 gas turbines in this size bracket per year during the timeframe of the analysis. Yet the total world manufacturing capacity for gas turbines in this category is estimated at around 400 machines per year. Clearly, there is major overcapacity in the production base for these gas turbines.
The cause of the overcapacity in this sector is a basic change in the generating environment. Slade points out that “10 or 15 years ago, the response to an increase in electricity demand was to build more generating capacity. This isn’t the case anymore. The link between electricity demand and generating capacity has been broken.” Slade added, “Investment can also be placed in building more efficient distribution grids, installing better control systems for generating plant, or subsidizing the installation of better insulation in homes and the purchase of more energy-efficient appliances. These can reduce electricity demand substantially.”
In addition, the surge in the use of renewable energy resources is hitting the gas turbine market hard. In Europe, the subsidies paid to power generation facilities that use renewable resources such as wind, solar power or tidal power are enough to make simple-cycle gas turbine plants uneconomical. Many such plants have been mothballed or operate only a few hours a week. If additional power is needed, these plants can be brought to full operating status in lieu of building new capacity.
Slade summarized the situation as follows: “The demand for gas turbines is increasing, but not by the amounts indicated from power demand figures. These days there are too many alternatives to building new capacity for that. Overcapacity in the 100-MW-plus sector is something that companies will have to address if they want their gas turbine production business to remain profitable. Right-sizing will be the key.”