GT Orders Are Struggling

The gas turbine industry is hurting.

I just attended a presentation on turbine trends at the Western Turbine Users Inc. (WTUI) conference in Palm Springs. Given by Mark Axford of Axford Consulting and Tony Brough of Dora Partners, it will be the subject of a feature article in the next issue (along with a WTUI show report).

Here are some of the facts from that WTUI session:

• Worldwide GT orders in MW were down 29.4% in 2017 and unit orders were down 17.6%.

• Since 2012, MW orders are down 45% and unit orders are down 60%

•Worldwide aeroderivative turbine MW orders were down 19%, and unit orders down 28% in 2017

• U.S aeroderivative MW orders down 48% in 2017

• Massive layoffs in the power section from the big turbine OEMs.

Our Turbomachinery Handbook 2018 cited the following statistics from Forecast International and Industrial Info Resources:

• Forecast’s current analysis expects $112.1 billion in GT revenues over the next decade. Five years back, it anticipated $152.9 billion in the coming decade

• For the next three years, this means the annual turbine sales forecast has dropped from $15 billion to $10 billion

• The number of units to be sold over the next decade shrunk from 12,521 in the 2012 ten-year prediction, to 4,719 in this year’s forecast

• Models in the 0.2 to 3.0 MW grouping have fallen from 19% of unit sales in the 2012 report to less than 2% this year.

Axford noted renewable subsidies would continue through 2020 and were a significant reason behind the decline. But flooding the grid with renewables is already creating problems in states like California and Texas, as well as countries such as Germany.

Driving into Palm Springs to the WTUI conference, I saw thousands of wind turbines and only about 2% spinning. If Southern California Edison and other utilities in that region continue to be forced to retire their fossil assets due to state and federal policy, the Golden State could be in for a rude awakening.

Perhaps in twenty years, industrialized nations will be able to keep running 24/7/365 without traditional power sources existing. But that’s wishful thinking based on the hoped-for maturity of battery technology and fuel cells. Regardless of policy, we do have a place in the world. We need to define it and own it.

After all, a small recip company from Finland known as Wärtsilä has carved out quite a market for itself by providing engines and power plants in the 20 MW to 200 MW range. They package them to provide fast ramp power for CHP, combined cycle and simple cycle — whatever the customer wants. And they are in demand. Complacency at the low end of the market has enabled this company to occupy a space that was once dominated by GTs.

I do see some light at the end of the tunnel. At WTUI, the new head of GE’s aeroderivative turbine business said the company would invest $180 million in aeroderivatives and offered some fighting words about the strength of the market. Similarly, at the Baker Hughes GE (BHGE) conference in January, the company noted that its NovaLT line of GTs was selling well and that they were developing more models (it serves the 5 MW to 16 MW market). These are clearly examples of products the market needs and wants. We need more examples like these.

But what should be done? I’m happy to take an article from any GT OEM on what they are doing to reverse our fortunes. I’d also like to hear from some readers. A request, though: The time has come and gone to complain about renewable subsidies or politics. The nation is committed on a path towards renewables and clean energy. That clock is unlikely to ever turn back. What we need to do is come to terms with how things are: and figure out how to stay relevant and create a sustainable model for the future that WILL keep the lights on.

Any suggestions?