Deep dive

It’s always a pleasure to get to see our annnual market reviews from Forecast International (FI) and Industrial Info Resources (IIR). They are chock full of fascinating statistics and tidbits about where the industry is currently and where it is heading. It’s become something of an annual tradition to take these numbers and do our own deep dive in order to glean more meaning.

Last year, we gave most of the attention to IIR data. This year, the focus is on an analysis of the FI report (p.10). When we delve into gas turbine unit orders by MW category, the first thing that leaps out is that the largest zone of growth is in units bigger than 200 MW at 61% growth over the next decade. Granted, the raw numbers are relatively small. Some 18 orders are expected this year, moving up to 29 in ten year’s time. But then each order is a multimillion dollar item.

What makes it even more interesting is when you glance at the same FI prediction from last year’s handbook. Only a year ago, FI anticipated 10 orders for GTs of more than 200 MW in 2014, and a mere 12 by 2023. Suddenly those playing in the big league are looking at a rosier picture.

Now view those figures in the context of recent merger mania. It is apparent that GE, Siemens and MHI have been augmenting their line-ups to present the best possible power packages to serve the upper end of the market.

By far the biggest number of orders for large turbines are in the 180 MW to 200 MW range. This band accounts for around 200 unit sales per year and will experience growth of 29% over the coming decade. But right below that in the 125 MW to 180 MW range, FI predicts no expansion at all, with orders stalled at just under 100 units per year.

Now let’s look at the low end (in terms of MW). Microturbines (less than 3 MW) are expected to have 25% growth over the tenyear period, with orders for 2014 likely to be around 227 units. Now 25% isn’t bad if you are in a mature area of the market. But microturbines ought to be a huge area of growth for turbomachinery. We could reasonably expect it to have by far the highest percentage of unit order expansion. It just isn’t happening. We’d be interested to receive an article explaining the technical or economic reasons why.

Just one spot up in the 3 MW to 10 MW category, FI anticipates 39% expansion over the next decade. Further, unit sales are higher than for microturbines and the gap is widening.

This brings up another point. Units smaller than 50 MW rack up 70% of the orders. Hence, another reason for the ongoing acquisition frenzy. We recently met with Rafael Santana, President and CEO, Turbomachinery Solutions, GE Oil and Gas, about his company introducing a new line of machines to serve the below 20 MW space. He said that this opens up a more than $5 billion market, which adds 40% to 50% to the size of his potential business.

But let’s not forget about the IIR report (p.16). What stands out is:

• Gas and renewables are the only games in town

• The northern and western states are predominantly focusing on wind and solar whereas the southern and eastern states perfer gas generation.

The west, therefore, is where the problems of renewable integration will be ironed out while the rest of the country waits to see the results.

But don’t take our word for it. We are hardly scraping the surface in terms of what the FI and IIR reports can tell us. Take a look for yourself and let us know what else you noticed. We’ll publish the most insightful comments in our next issue.