Global Gas and Steam Turbine Markets

Conventional Thermal Power Expansion Driven by Emerging Markets

and Rising Natural Gas Availability

M96C-14
June 2014
 Executive Summary

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 Key Findings

• Global gas turbine market revenue is expected to increase from $18.00 billion
in 2013 to reach $26.07 billion by 2020, corresponding to a compound annual
growth rate (CAGR) of 5.4% over this period.
• The market is driven by the replacement of aging coal plants with modern gas-
fired power stations, the growing availability and usage of natural gas in power
generation, strong expansion of the global oil and gas industry, and the rising
need for more flexible generating assets linked to the growth of intermittent
power generation based on renewable energy sources.
• Strong growth is anticipated for the years beyond 2016, as the prospects for
new gas plants start to improve in the weak European region and growth
accelerates in China and India.
• Total global orders for gas turbines are forecast to rise from 58,364 megawatts
(MW) in 2013 to 81,530 MW in 2020. The market will expand significantly, with
order levels rising in excess of 5% annually from 2015 onwards, before growth
trails off towards the end of the forecast period as emerging markets become
more mature and renewable energy becomes a more attractive proposition for
large-scale generation.
• A total of 556 gigawatts (GW) of gas turbines are forecast to be ordered over
the 2013 to 2020 period.
Image Source: Frost & Sullivan Image Resource Bank. Source: Frost & Sullivan

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 Key Findings (continued)

• The small- and medium-sized gas turbine output ranges are expected to grow
faster than larger units. This is largely driven by on-going market uncertainty in
the utilities sector, mainly across developed markets, over the future of carbon
markets and the development of renewable energy, affecting the outlook for
conventional generation. Smaller ranges will benefit from the greater need for
flexible generating units and the growth of the oil and gas industry.
• Power utilities and independent power producers (IPPs) represent the bulk of
gas turbine orders in the market, accounting for over two-thirds of orders in the
market. Going forward, both the mechanical drive and industrial segments will
expand more rapidly than the utility/IPP segment.
• Gas turbine prices have fallen from their peak by approximately 20% as a
result of reduced demand in power generation equipment in the aftermath of
the economic crisis but have remained relatively stable since 2012. Frost &
Sullivan expects global prices to start picking up from 2014 as demand for gas
turbines rises and manufacturers’ spare production capacities are reduced
with significant regional variations.
• The latest generation of gas turbines were initially conceived with greater
efficiency as the key goal, but greater operating flexibility has emerged as the
key battleground between original equipment manufacturers (OEMs).
Image Source: Frost & Sullivan Image Resource Bank. Source: Frost & Sullivan

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 Key Findings (continued)

• China is expected to become the leading gas turbine region as the position of
the Middle East, hitherto the undisputed leader, declines gradually. China is
aggressively promoting gas turbine plants in a bid to reduce dependence on
coal plants and promote fuel diversification.
• The global steam turbine market is expected to increase from $14.51 billion
in 2013 to reach $17.42 billion by 2020, corresponding to a CAGR of 2.6%
over this period. The market is driven by large coal-fired capacity additions in
emerging markets such as China and India, growth in combined-cycle gas
turbines (CCGT) plants requiring steam turbines, the expansion of nuclear
power, and the trend towards upgrading outdated coal plants with supercritical
and ultra-supercritical technology.
• Global orders for steam turbines will remain broadly stable over the forecast
period, rising marginally, from 100,143 MW in 2013 to 102,340 MW in 2020.
Recovering order levels in some developed regions will be offset by
weakening order levels in the world’s largest steam turbine market, China.
• Small- and medium-sized steam turbine output ranges are forecast to rise
somewhat faster compared to the average growth as a result of better
financing prospects for smaller plants as well as industrial applications,
including those in the expanding oil and gas industry.
Image Source: Frost & Sullivan Image Resource Bank. Source: Frost & Sullivan

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 Key Findings (continued)

• Unlike gas turbines, steam turbines are highly customised so prices vary
substantially depending on the specific location, application, technology (sub-
critical versus supercritical or ultra-supercritical), and the customer’s buying
power. Frost & Sullivan expects steam turbine prices to remain fairly stable
over the next few years, reflecting the highly competitive nature of the market
and Chinese OEMs increasingly making inroads into other markets.
• Ultra-supercritical (USC) steam turbines can achieve efficiencies of up to 47%,
compared with an average of 39% for sub-critical units. USC units have
started to replace older plants at an accelerating pace, as China has
increasingly installed USC machines.
• Major OEMs and institutions in Europe, the United States, Japan, China, and
India are working on breaking through the 50% efficiency barrier, focusing on
raising the temperature and pressure of steam turbine operating conditions.
• While China’s share of the steam turbine market is forecast to decline over
time—albeit remaining in a dominant position—India’s share will expand upon
resolving its coal shortage issues. Southeast Asia will also grow strongly as it
looks to coal to reduce gas dependence.
• The European market will remain weak amid uncertainty over future power
demand growth and financially troubled utilities.
Image Source: Frost & Sullivan Image Resource Bank. Source: Frost & Sullivan

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 Gas Turbine Market Engineering Measurements

Gas Turbine Market: Market Engineering Measurements, Global, 2013

Market Overview
Market Revenue Orders at End
Market Size in Market Size in
Market Stage at End of of Forecast
Revenue Orders (MW)
Forecast Period Period (MW)

Growth $18.00 B 58,364 MW $26.07 B 81,530 MW

(2020)
(2013) (2013) (2020)

Base Year Market Compound Annual Base Year Market Compound Annual
Revenue Growth Growth Rate for Growth Rate for Growth Rate for
Rate Revenue Orders (MW) Orders (MW)

3.3% 5.4% 2.9% 4.9%

(2013) (CAGR, 2013–2020) (2013) (CAGR, 2013–2020)

For a tabular version, click here.

Decreasing Stable Increasing
Note: All figures are rounded. The base year is 2013. Source: Frost & Sullivan

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 Gas Turbine Market Engineering Measurements
(continued)

Market Overview Competitor Overview

Degree of
Customer Price Replacement Market Number of
Technical
Sensitivity Rate Concentration Competitors
Change

7 4 20–25 Years 78.8% 25–30

(average period of unit (% of market share held by top (active market competitors in
(scale:1 [low] to 10 [high]) (scale:1 [low] to 10 [high]) replacement) 3 companies) base year)

Competitor Overview Industry Advancement

Number of Number of Marketing
Companies that Average Plant
Companies that Spend as a % of
Entered* Set up time
Exited* Market Revenue

0 0 3 Years 5%

(2013) (2013) (2013) (2013)

Decreasing Stable Increasing *Note: Companies with revenue of more than $50 M
Note: All figures are rounded. The base year is 2013. Source: Frost & Sullivan

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 Steam Turbine Market Engineering Measurements

Steam Turbine Market: Market Engineering Measurements, Global, 2013

Market Overview
Market Revenue Orders at End
Market Size in Market Size in
Market Stage at End of of Forecast
Revenue Orders (MW)
Forecast Period Period (MW)

Mature $14.51 B 100,143 MW $17.42 B 102,340 MW

(2013) (2013) (2020) (2020)

Base Year Market Compound Annual Base Year Market Compound Annual
Revenue Growth Growth Rate for Growth Rate for Growth Rate for
Rate Revenues Orders (MW) Orders (MW)

1.0% 2.6% 4.2% 0.3%

(2013) (CAGR, 2013–2020) (2013) (CAGR, 2013–2020)

For a tabular version, click here.

Decreasing Stable Increasing
Note: All figures are rounded. The base year is 2013. Source: Frost & Sullivan

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 Steam Turbine Market Engineering Measurements
(continued)
Market Overview Competitor Overview
Degree of
Customer Price Replacement Market Number of
Technical
Sensitivity Rate Concentration Competitors
Change

6 7 35–45 Years 46.5% 30–35

(average period of unit (% of market share held by top (active market competitors in
(scale:1 [low] to 10 [high]) (scale:1 [low] to 10 [high]) replacement) 3 companies) base year)

Competitor Overview Industry Advancement

Number of Number of Marketing
Companies that Average Plant
Companies that Spend as a % of
Entered* Set up time
Exited* Market Revenue

0 0 4 Years 5%

(2013) (2013) (2013) (2013)

Decreasing Stable Increasing *Note: Companies with revenue of more than $50 M
Note: All figures are rounded. The base year is 2013. Source: Frost & Sullivan

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 CEO’s Perspective

Gas turbine market growth will outpace

1 that of steam turbines as natural gas
availability rises globally.

There is a trend towards smaller plants

2 that are faster to build and easier to
finance.

Oil and gas industry growth will boost

3 both gas and steam turbine orders.

Brand, price, technical performance,

4 and local servicing capabilities are key
competitive factors.

Chinese steam turbine OEMs are

5 growing outside China on the back of
expanding EPC track records. Key: EPC = Engineering, Procurement, and Construction
Source: Frost & Sullivan

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