Global Gas Turbine Market Trend – Fostering Clean Power Generation
Rising population, a rapid rate of urbanization resulting in the increased demand for energy along with rising acknowledgment of negative environmental impacts of coal-based power generation is anticipated to drive the gas turbine market to a new zenith during the next few years. A recent example pertaining to the latter is the announcement by TransAlta Corporation (NYSE: TAC) in September 2019, about Clean Energy Investment Plan amounting to CND$2 billion that reportedly included the conversion of its existing Alberta coal assets to natural gas, thereby enabling the organization to achieve a leadership position in the renewable energy-based power generation by 2025. In view of the above, it was reported in June 2020, that the organization is reportedly converting Keephills and Sundance coal-fired plants to natural gas, located in Alberta, Canada. As part of its coal-to-gas conversions (CTG), the two 230MW Siemens F class gas turbines, which were purchased by the organization reportedly in October 2019, will be integrated into the steam turbine that is already installed in Sundance Unit 5, facilitating the conversion into an efficient combined-cycle unit.
Projectionof Total Population at Mid-Year, World
Source: United Nations,
2020-2060: MEDIUM VARIANT
According to IEA, the year 2019 witnessed the expansion of gas fire generation by 3%. China experienced a slow down in its growth reportedly witnessing a reduction from 30% in 2018 to 6% in 2019 with gas supporting a small share of power generation that was reportedly less than 4%. Europe witnessed an increase in usage of gas for power generation which was around 9% due to CTG conversions. In Japan, the use of gas dropped by 8% that in part stemmed from overall lower power demand and higher nuclear power output. Spending on gas-fired power continued to decline in the United States and the MENA region during the year while increasing in Russia and Europe. Since 2016, for the first time, the number of gas-fired generation grew, which comprised more than 55 GW. Planned gas fire projects especially those of combined-cycle plant projects had reportedly increased driven by the need for ancillary services, firm capacity, and ensuring flexibility to the system with more variable renewable projects being commissioned.
Nevertheless, the APAC region had witnessed developments in power projects pertaining to gas turbines. For instance, Doosan Heavy Industries & Construction (KRX: 034020) had reportedly announced in September 2019, the final assembly of large 270MW gas turbine in development as part of the national projects which was developed with a total investment of KRW one trillion and took 6 years to complete. The resulting establishment of the new gas turbine industrial ecosystem is expected to substitute energy imports of about KRW 10 trillion 2030. Moreover, in July 2020 GE (NYSE: GE) had reportedly announced that Advanced Gas Path (AGP), which is the organization’s advanced gas turbine technology upgradefor the upcoming 718-megawatt (MW) combined cycle power plant in Meghnaghat, Bangladesh by a joint venture between India’s Reliance Power and Japan’s JERA called Reliance Bangladesh LNG & Power Ltd. In view of the above Meghnaghat power plant will be powered by two GE 9F gas turbines, among others, to generate electricity from re-gasified liquified natural gas (LNG).
Nevertheless, the applications pertaining to power generations will witness a downward draft as the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, have been cutting output since May by 9.7 million barrels per day due to the crisis that has been brought about by COVID 19 which had reportedly affected a third of global demand that lead to a price collapse, leading to 21-year low which is below $16 during April 2020. This has led to the oversupply of the byproduct of the crude output which is known as natural gas leading to a fall in price. This has led to a historic price drop, which has led to the decision to cut down production, among others, thereby eliminating gas output as well. The further market of gas turbines is estimated to face a slight dent in growth due to cancellation of projects as evidenced by an announcement in April 2020, whereby E-Fan X, a joint effort between Airbus and Rolls-Royce to develop an experimental hybrid-electric aircraft, which encompassed, among others, a Rolls-Royce AE 2100 gas turbine-driven power generation system and high power electronics resulting in a reported 2.5 MW power generation system.
On the other hand, Iberdrola Clientes S.A.U. (BMAD: IBE) had in June 2020, reportedly canceled a project in Mexico pertaining to build a combined cycle power plant because of the organization couldn’t reach a supply agreement with the state utility, known as CFE. Further delays in deal closures are also expected to affect the gas turbine market. For example, a deal between OMV Aktiengesellschaft, an Austrian company that is known to produce and market oil and gas and Gazprom has been delayed, and reportedly the two companies aim to sign the final transaction documents by June 2020. Within the ambit of the deal, the agreement of payment by OVM of 905 million euros ($1 billion) for 24.98% of Gazprom’s Achimov IV and V phase development at the Urengoy gas fields was made. This deal was initially scheduled to be closed by the end of 2019. Another recent development that is affecting the revenue stream of the equipment manufacturers is the deferring of maintenance schedule by power plant operators which is in turn impacting equipment manufacturers who are also major service providers to power plants. For example, during first-quarter revenues of GE’s reported segment was down by 13%. Moreover, the segment profit of negative $129 million was down by $239 million, primarily due to lower services volume and additional costs from COVID-19 disruptions.
Access to Electricity (% of Population)
Source: THE WORLD BANK
Another category of gas-turbine, which is known as microturbines is expected to augment the growth of the market. A far recent development is concerned in August 2020, Capstone Turbine Corporation (NASDAQ: CPST), globally renowned as the leading clean technology manufacturer of microturbine energy systems, had announced that it secured an order for a global hotel chain for Three low-pressure natural gas-fueled C65 ICHP microturbines to be installed in one of its hotels in Northern California. These turbines will reportedly provide up to 195 kilowatts (kW) of power and 1.2 MMBTU/hr of hot water to offset utility power purchase and boiler natural gas use. Besides, in the next few years, the soaring energy demands along with the addition of environmental drivers will lead to more investments further driving the growth of gas turbines to new heights.
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