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Each year, we receive in-depth analyses from two of the premier market intelligence companies in the power generation and gas turbine (GT) fields. Industrial Information Resources (IIR) provides an overview of the U.S. power generation sector. Forecast International supplies global insight into GT sales. Both reports are included in this year’s handbook.
Taking a look at the numbers, it is apparent that there are some tough times ahead for GTs. Forecast International noted overcapacity among GT OEMs and a turndown that will result in a few lean years.
The market is expected to bottom out by 2020 and then slowly revert. But it won’t be until 2023 that we exceed 2018 GT sales levels. That’s why Forecast is citing a drop of more than 7% in GT sales over the next ten years compared to last year’s report.
Strong points include large-scale combined cycle facilities, especially in Europe and Asia, modernization of facilities built in the 60s and 70s, and a market sweet spot for turbines of 250 MW and larger. Those in the 20 MW to 100 MW range, though, appear to be in trouble. The exception is likely to aeroderivatives which will dominate GT sales in that range.
The IIR study puts those numbers in perspective. Despite tough times, natural gas generation is still likely to account for around 40% of the overall U.S. market over the next five years. That number has remained stable for the last few years. But it is under threat in California and other western states.
With coal and nuclear now beaten into submission, the environmental lobby has gas turbines in its sights as the next fossil fuel to eliminate. While some may see this as an extreme stance, these guys are serious.
California has already enacted legislation to be 100% fossil fee by 2040. Some other states will follow suit. They believe battery energy storage can replace natural gas to fill the availability gap that plagues renewables. Realistic or not, that is the plan.
Clearly, the gas turbine industry needs to up its game. Propaganda abounds about the evils of power plant emissions. The environmental lobby is painting GTs with the same brush it used on coal generation.
That has already led several utilities on the West Coast to cancel plans to modernize GT plants. The City of Glendale in California, for example, has shelved the modernization of its aging gas-fired plant in favor of cleaner, non-emitting electric options. If this wave of anti-gas sentiment grows, IIR’s estimate of almost 90,000 MW of new gas generation over the next five years could drop markedly.
Battery storage is seen as the panacea for any energy shortfall in an emission-free future. But the technology is immature and is struggling to scale adequately.
Taking tens of thousands of fossil megawatts off the grid to replace them with renewables and batteries may be overly optimistic. But time will tell. IIR knows of 30 utility-scale battery storage projects that will go into construction in the next five years.
At that rate, it could be ten years or more before we know if battery storage has a significant role to play in the future energy mix. Yet utilities seem to be rushing in this direction, much in the same way they rushed to nuclear and IGCC. Both proved to be foolhardy gambles.
It may be possible to eventually reach an emissions-free future. But let’s arrive there smartly. That requires fossil-based and renewable proponents to adopt a less adversarial stance. There has to be a middle ground that considers lowered emissions, a workable power infrastructure, grid security and technological maturity.
Perhaps even coal has a small role to play. Here is why. Imagine that the natural gas pipeline network fails. That wind and solar aren’t adequate to power the grid. A large stockpile of coal can act as an emergency backup source to ensure power availability.
It could even represent energy storage on a grand scale. What about the emissions? If there is no power, anywhere, people will be happy to temporarily fire up the coal plants to get the heating and cooling back on. It might be a last resort, but taking it completely off the table may not be the wisest course.