Inside Ansaldo
Peak practice
Changing times
Back to the future
Record breaker
High temperature TBCs
page 11
page 12
page 16
May - June 2016
page 22
page 26
page 33
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Gas turbine orders on a path
to recovery and global growth
By Anthony Brough
Dora Partners & Company
Global industrial gas turbine orders for the Electric Utility sector
should rise to 500 units in 2020 from about 450 units this year. The Oil
& Gas sector should continue to recover from a record low of 350 units
this year and climb to 550 units over the next 5 years.
Market dynamics
Dramatic changes in the industrial
gas turbine marketplace over the last
5 years include consolidation of aerotechnology OEM builders, introduction
of digitalization to make gas turbine operation more profitable and responsive,
displacement of coal fired generating
capacity by gas-fired gas turbines, resurgence of gas turbine peaking and in-
termediate load capacity to back up the
increasing use of renewable energy.
General trends
n Small gas turbines (less than 5 to 6
MWs in unit size) continue losing market share to gas-fired reciprocating engines. Thanks to recips’ unaffected hot
day and high-altitude performance,
maintenance cost reductions, higher
simple cycle base and part-load efficiencies (than gas turbine), improved exhaust emissions.
n Aeroderivative technologies developed for advanced aircraft jet engines
continue to influence design, operation
and performance of more efficient and
flexible heavy frame gas turbines. Synergies of this effort have resulted in better
Figure 1. GTW’s market analysis is based on over 35,000 gas turbine installations ranging from 1MW to 300+MW in unit
size (close to 1.5GW
TW in capacity). Inner circle is by “unit count” and the outer circle is by “capacity”.
5%
Ansaldo
1%
4%
1,474GW
Installed
5%
Light Industrial
12%
Aeroderivative
8%
Mitsubishi
35,371
Units
Installed
35,371
Units
Installed
53%
General
Electric
27%
Siemens
n General Electric
n United Engine Corp
n Mitsubishi
n Hitachi
n Siemens
n Ansaldo
n Solar Turbines
n Zorya-Mashproekt
n Power Machines
83%
Heavy Frame
n Aeroderivative
n Heavy Frame
n Light Industrial
n All Others
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simple and combined cycle efficiencies,
faster start times, higher ramp rates, better turndown characteristics, improved
availability and maintainability.
n Major gas turbine OEM acquisitions
and joint ventures to access advanced
aero technology. Examples: GE Power
leveraging advanced engineering and
materials from the aviation jet engine
group in the design of its new generation HA-class heavy frame machines;
Mitsubishi Hitachi Power Systems adding Pratt & Whitney jet engine technology to its industrial product line (by acquiring PW Power Systems); Siemens
acquiring Rolls-Royce’s aeroderivative
gas turbine engineering, manufacturing
and sales operations.
n OEM customized use of fleet performance data (digitalization) to improve
plant control, dispatch and profitability. Optimization of major systems for
combined cycle plants includes tighter
integration of the gas turbine, heat recovery steam generator, and balance of
plant systems. Net result: faster starts
and shorter restarts, improved availability and reliability, higher net plant
efficiencies, and better turndown characteristics.
n OEM offerings of power augmentation systems such as inlet air chilling,
fogging and wet compression technologies as options to “super-charge” gas
turbine performance, yielding higher net
power output while reducing total capital expenditure on a $/kW basis.
Suppliers for those fogging and wet
compression systems (system integrators, pump manufacturers, electric motor drives, filtration systems, and spray
nozzle manufacturers) are likely to see
more robust business activity.
Changes in the marketplace
As technology, design and performance
evolve with time, so does the gas turbine
marketplace and opportunities for EPCs
and balance-of-plant (BOP) system suppliers.
Thanks to increased power plant inte-
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gration, suppliers are developing stronger relationships with the OEMs to optimize the total offering and increase net
competitiveness.
Changing technologies, competitive
sources of energy and environmental
awareness are now critical factors in
shaping new market directions. They are
also important to a fundamental understanding of how and why the gas turbine
market can be expected to change.
Future market studies
To be effective, market studies should
blend traditional analytic research with
an intimate knowledge of competitive gas turbine OEM weaknesses and
strengths – and the competitive edge of
new technology, backed by a sound historic database of year-to-year industry
and OEM gas turbine orders.
Dora Partners & Company and McCoy Power Reports, have recently
joined with Gas Turbine World to pool
our industry expertise and resources to
deliver multi-client and custom gas turbine market studies and forecasts covering the Electric Power Utility (Power
Generation) and Oil & Gas market sectors of the industry.
Our reports will take a deep look into
the value chain (supplier network) and
how it is changing, how the aftermarket
is served and is changing, and how renewable technologies will continue to
impact the industry.
Figure 2. Since 2014 gas turbine orders by capacity are up 9.3% while the
number of units are down 18.2%.
GT Orders in Megawatts (Capacity)
64,607MW
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2010
2011
2012
2013
GT Orders in Units
2014
2015
1125 Units
1,000
800
600
400
200
0
2010
2011
2012
2013
2014
2015
GAS TURBINE WORLD May - June 2016 13
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Each of the market research partners is uniquely fitted: Dora Partners
has over 20 years of engineering and
marketing experience in the gas turbine
industry, McCoy over 35 years of collecting data and reporting power project orders, and GTW over 45 years of
industry reporting on gas turbine design
performance, advanced technologies
and project applications.
Collectively we have a database of
over 35,000 gas turbine orders for units
ranging from 1MW in size to the latest
jumbo G/H/J technology turbines from
GE, Siemens, and MHPS rated at 300 to
500MWs (see Fig. 1).
Global turbine orders when measured
by capacity have been rather steady at
approximately 64,600MWs on average over the past ten years (see Fig. 2).
However, when measured in number of
units, orders are down significantly for
the last two years, primarily driven by a
reduction in orders in the O&G sector.
In 2015, gas turbine order activity
was up 9.3% vs. 2014 on a capacity basis while down 18.2% on a unit count
basis. Since 2011 the order activity on a
unit basis is down 37%.
From a regional perspective (see Fig.
3), North American gas turbine orders
have seen an increase in 2015 because
of lower natural gas prices, legacy power plant decommissioning, and expansion in Mexico.
We anticipate order activity in North
America to remain relatively robust, primarily for large Heavy Frame gas turbines over the next few years.
Europe has remained flat or even suppressed over the last 8 years, though
Eastern Europe and Central Asian activity has balanced this reduction in activity.
Despite the downturn in unit orders,
overall capacity of gas turbine power
plants continues to grow (see Fig. 4)
as gas turbine unit output rises and the
need to displace coal-fired power plants
increases.
New production models from GE
(Frame 7F, 9F, 7HA, and 9HA), Siemens (SGT5/6-8000H), and MHPS
(M501G/J units and M701J) are proving
to be cost effective replacement generation sources, even while renewables like
wind and solar continue to see additions.
Figure 3. Regional distribution of GT orders. Activity in North America expected to remain relatively robust over the next few years, primarily for heavy
frame gas turbines.
100%
100%
6%
8%
11%
9%
20%
17%
16%
10%
21%
8%
8%
60%
40%
20%
0%
36%
29%
2010
27%
5%
32%
35%
38%
32%
2011
2012
14%
24%
5%
20%
20%
3%
32%
29%
30%
27%
29%
2013
2014
2015
2016-2025 Forecast
We are working on a 10-year forecast
model that is backed by over thirty-six
continuous years of historical data, multiple forward-looking market indices,
industry contacts, and years of analytic
experience by semi-retired gas turbine
OEM marketing specialists.
Historical input includes traditional
factors such as OEM market penetration, regional and key customer/operator order activity, and changing global
demographics based on gross domestic product expectations, population
growth, industrial development, government action and regulatory expectations.
n North America
n Middle East/Africa
n Latin America
n Europe/C. Asia
n Asia
To that is added the potential of different OEMs to introduce advanced
technologies and upgraded/new series
gas turbine designs which offer a competitive edge.
Our GTW forecast takes all these
factors into account when analyzing and
projecting 10-year order expectations -including growth sectors, applications,
and geographic regions.
For context, we have plotted the
year-over-year change for capacity and
new unit orders since 2007 (see Fig. 5).
This baseline forecast is based upon
several assumptions, including 1) no
significant change in growth in Asia-Pa-
Figure 4. Gas turbine plant size continues to grow, while more coal-fired
power plants are being shut down and retired.
MW
550
500
450
Average Power Plant Order (by GT size)
GTs w/unit output of 100-150 MW
GTs w/unit output of 150-300 MW
GTs w/unit output of 300+ MW
450MW
400
400MW
350
300
250MW
250
200
150
100
2001
2003
2005
2007
2009
2011
2013
2015
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Unit
Order
Actual Forecast
Market Movement (Units)
50%
2016
2015
2014
2013
2012
2011
2010
2009
2008
10%
0%
-10%
2007
30%
-30%
-50%
MW
Orders
PG
Both
OG
Actual Forecast
Market Movement (MWs)
50%
2016
2015
2014
2013
2012
2011
2010
10%
0%
-10%
2009
30%
2008
Highlights
Reciprocating engines should continue
to chip away at the small gas turbine
segment (less than 5MW) while large,
heavy frame turbines take relatively
strong orders in the coming years.
New aeroderivative entries like the
LM6000PF+ and the FT4000 pose good
growth potential in applications such
as peaking and highly “fit dependent”
cogeneration projects. Also, while the
SGT-800 is not strictly an aeroderivative, it is a highly competitive offering,
especially in cogeneration applications.
In the Oil & Gas Sector, the LM2500/
LM2500+ have held very strong market shares over a prolonged period and
should remain dominant. We also anticipate the combination of investment by
Siemens and Dresser-Rand’s Oil & Gas
business to increase sales of Industrial
RB211 and Trent 60 models.
The Siemens SGT-750 is likely to
make in-roads into the O&G Sector,
while Solar will continue to perform
well with offerings under 20MWs while
also leveraging a strong compressor
Figure 5. Plot of year-over-year change for gas turbine capacity and new unit
orders from 2007 through 2015.
2007
cific. 2) natural gas fuel prices remaining relatively constant, 3) oil prices remaining in the $35 - $45/bbl range, 4)
global pressure continues to limit coal
and nuclear fuel.
We estimate that worldwide capacity
additions for the Electric Power Utility
(PG) Sector will increase 10.1% by the
end of 2016 vs. 2015 and new unit additions increase by 8.4%.
For the Oil & Gas Sector, we expect
to see a decrease of 8.9% in new units
additions by the end of 2016 vs. 2015
and associated decrease of 10.6% in
added capacity.
-30%
-50%
PG
portfolio to pair with their turbines. We
anticipate new entrants into the coveted
“20 – 40MW” segment and alternative
strategies for the “100 – 150MW” segment in the coming years.
A more detailed analysis of the industrial gas turbine industry by segment and
model-by-model, with a detailed 10-year
forecast, will be completed soon. It in-
Both
OG
cludes scenario analysis with base-case,
upside and downside presentations.
Based on this forecast, we estimate
that approximately $200B will be spent
in “uninstalled gas turbine package”
value. Additionally, given the current
fleet size, over $240B will be spent in
overhaul and repair activity over the
2016-2025 forecast period. n
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