GAS TURBINE FORECAST 2023

The gas turbine power generation market is on the way to some normalcy after a decline in the mid-2010s and the COVID-19 pandemic. With recovery in prospect, the shift to greener machines is underway with the major turbine players announcing increasing amounts of hydrogen to power their turbines. Siemens Energy, General Electric, and Mitsubishi, in particular, are developing burners to adapt to a natural gas and hydrogen mix or even pure hydrogen. With that said, gas turbines will be needed moving forward to augment renewables, especially in North America and Western Europe. Gas turbines will continue to see advances in efficiency and will remain attractive options for power production.

This Forecast International market analysis of gas turbine-powered electrical generation projects that sales over the period 2022-2031 will total $117.087 billion. This is indicative of a recovery in the gas turbine electrical power generation market. The recovery from the mid-2010s was somewhat thwarted in 2020 by the COVID-19 pandemic. As COVID-19 hampered all activity for a time, the pandemic should be seen as a blip in terms of turbine production and not a lasting effect.

Gas turbines are expected to generate about $10 billion in sales in 2022. This is forecast to climb gradually to more than $12 billion by 2031.

Hydrogen’s entry into the market should not be understated, and is becoming an attractive option as a fuel for gas turbines. Green, blue, or gray hydrogen can be used to power turbines. Green hydrogen especially can be produced in a carbon-neutral manner. When a turbine burns pure hydrogen, it emits no particulate or carbon monoxide emissions. This means the machine can be a renewable supplier of energy if the infrastructure is there to transport the gas.

Either electrolysis for onsite hydrogen or pipelines are needed to make hydrogen a reality in running gas turbines. According to some sources, a natural gas pipeline can transport a mix of up to 15% hydrogen with little modification. Higher mixtures would need adaptation. Over the mid and long-term, the industry will be dominated by large combined-cycle facilities in the industrialized nations, notably Japan and countries in Europe and Asia.

The number of gas turbines produced will increase steadily between 2022 and 2030. This is the first time in a great many years that the industry has been forecast to experience steady expansion.

The 250-500 MW and 500-750 MW turbine classes dominate the industry in terms of dollar value. If anything, this trend will strengthen as the decade progresses.

A major impact in the U.S. and Western Europe has been the emphasis on conserving energy and adopting energy efficient alternatives to existing equipment. For example, consumers have been urged to switch from the old-style incandescent lightbulbs to compact fluorescent lightbulbs (CFLs) and to LED bulbs. The cost savings are significant for the homeowner. In addition, it smooths out the spike in demand that takes place when people come home from work.

Changing user consumption profiles is a worldwide phenomenon, although the motivation may differ from region to region. In Europe and America, the primary driver is to reduce electricity demand and thus reduce pollution and eliminate potentially harmful emissions. In other areas, the economic benefits of new, power-efficient technologies are the leading driver, placing electrical equipment within the reach of people who otherwise could not afford to run it. This will work to increase popular demand for available and reliable power supplies. Thus, the same basic consumer trends that will depress demand for additional generating capacity in some regions will increase it in others.

GE Energy is predicted to remain top in terms of market share in overall gas turbine revenue over the next ten years. It represents 38% of the pie, followed by 25% for Siemens Energy, Mitsubishi Power with 18%, and Ansaldo Energia with 5%. Together, these 5 companies will account for more than 80% of gas turbine revenue between now and 2031.

Europe, Asia, and North America are now roughly equal in terms of their percentage of the value they represent in international gas turbine sales.

North America. The impact of improved distribution and control networks is continuing to blur the distinction between baseload capacity and the rest. Only nuclear-powered generation is unequivocally considered baseload due to its long run times at steady-state load. In contrast, fossil-fuel plants are experiencing a different pattern of operation that exhibits frequent starts, load-following, and shutdowns to meet seasonal demands. As quick-reacting gas turbines replace steam machines, this trend is likely to continue.

However, it is well understood that the majority of breakdowns happen when a plant is either started up or shut down. This evolving operational profile is likely to increase the frequency of outages and the cost of procuring replacement parts. In parallel, sales of G-,H-, and J-class machines are increasing as utilities place more importance on efficiency and vendors accumulate operational experience with new designs.

Western Europe. Germany, France, and other countries are moving away from nuclear and focusing on renewables. Existing natural gas capacity will likely not be augmented, but will probably not be shut down. There are currently plants sitting idle but some may be brought back online. However, Russia supplied a majority of Europe’s gas. With the ongoing war, supplies of natural gas cannot be taken for granted. Norway can pick up some of the slack and run at increased output until 2030. It remains to be seen how the natural gas situation develops in Europe.

Eastern Europe. Electricity generation is rising in Eastern Europe, including Romania, Poland, Slovenia, Bulgaria, and Czech Republic. Aging coal plants are being replaced with combined-cycle natural gas plants. Renewables are not as prevalent in comparison to Western Europe; however, combined cycle plants will likely lay groundwork for more renewables.

Southeast Asia. Southeast Asia’s energy demand is projected to grow by 80% by 2040 as the regional economy triples in size and population rises by almost a quarter to 760 million. As a result, it is likely that oil demand will rise from 4.7 million barrels per day in 2024 to 6.8 million b/d in 2040. At the same time, natural gas use will grow by almost two-thirds to around 265 billion cubic meters. In sharp contrast to other regions, coal demand will greatly expand and overtake oil to become the largest fuel. Renewables will make inroads but should decline from 26% of the fuel mix to 21%. The share of fossil fuels will rise to 78% by 2040.

India and China. India and China are the two most populous countries in the world by a wide margin. Both are short on electrical power. The generation capacity is inefficient and a major cause of pollution, while grids are incomplete and lack proper coordination and administration. As in Eastern Europe, coal plants will be replaced by natural gas.

In summary, Forecast International predicts that the importance of gas turbines will not diminish over time. More efficient machines will continue to be produced and hydrogen will play more of a role, although how big of a role remains to be seen. ■

Carter Palmer is an Industrial & Marine Turbine Analyst at Forecast International, a provider of market intelligence forecasting, proprietary research, and consulting services for the Aerospace, Defense, and Power Systems industries. Forecast's Platinum 4.4 information and analysis service was used to compile this report. For more information, visit www.forecastinternational.com