Strong Aeroderivative Market, Weak Large Frame

New gas turbine orders worldwide (units in red, MW in blue), courtesy of Dora Partners.

The 32nd Annual Meeting Western Turbine Users Inc. (WTUI) conference kicked off this week with its traditional overview of gas turbine trends. Delivered by Mark Axford of Axford Turbine Consultants and Tony Brough of Dora Partners, the big news was a thriving aeroderivative market – and tepid large frame turbine sales.

New gas turbine orders down overall 12% (measured in MW) in 2021 but up on 8.5% in the number of units. But looking deeper at the numbers, aeroderivative unit orders in 2021 were up 11% for the year. When viewed outside of the volatile Russian market, aeroderivative unit orders were up 110%. Further, North American aeroderivative unit and ME orders were both up more than 300% in 2021. The LM6000 accounted for more than 50% of the MW orders and the LM2500+ for about 50% of the unit orders.

Worldwide, the LM2500+ dominates the market. It has a five-year share of 33% of all aeroderivative orders, 25% higher than the LM6000 in second place. The LM2500 and LM2500+ each have fleets in excess of 1200, with the Lm2500+ now leading. The LM6000 lies behind at around 1150.

“The LM2500+ continues to be the strongest GT and has been so for a long time,” said Brough.

The GE/Baker Hughes combo accounts for 80-90% of non-Russian aeroderivative unit orders. And, of course, the LM2500+ and LM6000 are the main contributors. This fits with an overall trend of lower sales in power generation and higher sales in oil & gas. In North America, the number of mechanical drive units sold in the past seven years is double what it was in the previous seven years.

Renewables and Hydrogen

Whatever the forecast, renewables are always expected to be up sharply. Yet, Brough believes gas turbines have a strong role to play over the long term. He noted all the attention on hydrogen but said this market will experience slow but steady progress. Meanwhile almost 400 hydrogen electrolyzer projects are already operational or under construction and nearly 500 more are at the feasibility or concept stage. About 50 plan to convert hydrogen into ammonia as a storage mechanism.

“It is unwise to dismiss hydrogen, but a lot of challenges have yet to be overcome in its utilization,” said Brough.

North American market share in MWs for aeroderivatives. Courtesy of Dora Partners.

Long-term sag

Mark Axford continued the presentation by showing the long downtrend in the gas turbine sector. 2021 was down 12% in overall gas turbine MW orders (including large-frame machines) and up slightly in unit orders.

“What was an annual GT market of 60 GW a few years ago is now a 30 GW market,’ said Axford.

But he echoed Broughs sentiments about the aeroderivative sector.Texas was a major contributor to the 2021 sure in aero orders, partly in response to the early 2021 power grid failures in that state.

He went into more detail about aero orders. Siemens Energy managed 19 sales in 2021 (up from zero in 2020) of its A35, A45, and A65 machines (formerly Rolls-Royce) yet it has ended their production.Mitsubishi’s stewardship of the FT9 MobilePac (formerly PWPS) pushed sales from 0 to 6 for the year.

There were 22 LM2500+ G4s ordered in 2020 and 47 in 2021. From 0 orders of the LM2500 Xpress in 2020, GE managed 17 last year. The TM2500 trailer increased from six to nine orders, and the LM6000 from 4 to 26 in 2021. GE LM9000 had a dire year, dropping to 0 from 20 in 2020. And the LMS100 continues fail to register any sales for the second year running.

GE U.S. aero orders in 2021 included 6 LM2500Xpress’ to Colorado Springs Utilities, 10 LM6000s to TVA, 2 TM2500 G4s to Entergy of Louisiana, 4 TM2500 G4’s to two power plants in northern California, 4 LM6000s to the Salt River Project in Arizona, and two LM6000s to WattBridge (ProEnergy in Texas).

“The LM2500Xpress is less expensive than a trailer-mounted TM2500 and can be relocated,” said Axford. “RWE in Germany also ordered 11 LM2500Xpress units.”

Meanwhile, ProEnergy has carved out a niche for itself. It refurbishes LM6000 gensets, making them more affordable, especially for those running less than 1000 hours. Its subsidiary WattBridge Energy owns and operates peaking plants within the Texas ERCOT system. This includes 38 LM6000s already and more are planned.

How about 2022? Axford forecasts MW orders to be down 10% in the U.S. and it to be an overall down year worldwide, particular for large-frame machines.

“But it should be a good year for small aero, especially if restrictions on oil and gas are lifted,” said Axford.

Finally, he expressed skepticism about the realities of hydrogen generation replacing natural gas for power generation.

“There are dozens of on-going test projects with hydrogen fuel but in my judgment, hydrogen will not become a mainstream fuel for gas turbines,” said Axford. “Perhaps a niche market will evolve for blending 5-10% hydrogen into the gas supply of regional markets.”