Global Gas Turbine Market Outlook to 2028

A gas turbine also called a combustion turbine is a key piece of equipment at a power plant that can convert the energy from the combustion of natural gas or other liquid fuels to mechanical energy. This mechanical energy then drives a generator producing electricity. The gas turbines are also used in the aviation and marine sectors for propulsion.

Gas Turbine Market Drivers 

Rapid shifting from coal to gas

Major countries are switching their coal power to gas power, the decision for power plants to switch from coal to natural gas is driven by stricter emission norms, low natural gas prices, and more efficient new gas turbine technology. 

Natural gas is a fossil fuel, but its carbon emissions are 50%-60% less compared to coal when combusted in a power plant, so it's considered a 'bridge fuel' in the energy transition to a carbon-neutral future. 

According to IEA, since 2010, switching from coal to natural gas has saved around 500 million tonnes of CO2, which is equivalent to putting up an extra 200 million electric vehicles running on zero-carbon electricity over the same period.

In the United States, the fracking boom has had a considerable effect on natural gas supply and prices. In addition to it, some state-level, as well as federal environmental policies, have pushed gas into the energy mix while phasing out coal in the US.

The Energy Information Administration (EIA), stated that, since 2011, around 102 coal power plants have been replaced and converted to natural gas in the United States. Between 2005-2019, the use of coal for electricity generation in the US more than halved, dropping from 50% to 23%. Natural gas now forms 38% of the US power mix.

In China, the demand for gas has risen very quickly in recent times owing to the coal crisis in 2021 and the increased industrial activity post covid induced lockdown. The demand for gas has returned stronger than pre covid level.

In the first half of 2021, China's gas demand saw a 16% increase, led by strong industrial demand, tight coal supply, underperforming hydro in south west China, and high summer temperatures which supported the gas-fired power generation.

The use of the Natural Gas Combined Cycle (NGCC) process for electricity generation has grown over the years to make it one of the leading sources of power. The advancements in engineering have increased the overall efficiency of the process. The attributes such as high efficiency (ranging from 45% to 57%) of NGCC relative to other power generation processes, lower CO2 emissions, low shorter construction period, and lower capital requirements have helped it gain prominence in the power sector.

Some of the other drivers

• Surging demand for electric power
• Fuel Flexibility of gas turbines

Restraints to the Gas Turbine Market Growth

Competition from renewables

In the energy sector, wind and solar PV power generation technologies have spread globally at a rapid pace. The International Renewable Energy Agency’s (IRENA) renewable power generation costs 2019 report states that more than half of the renewable capacity added in 2019 achieved lower power costs than the cheapest new coal plant.

Innovation and low-cost finance have brought down the costs of solar PV and wind, and they are now the most economical source of electricity in most markets. On average, new solar PV and onshore wind power cost less than keeping many existing coal plants in operation.

The cost of renewable technologies continues to fall year on year, onshore wind energy by 13%, offshore wind energy by 9%, and solar PV by 7%.

Global CO2 emissions from electricity generation shot up by just 9% over the last decade despite a 23% rise in electricity demand. Renewable energy technologies met almost 65% of the electricity demand growth over the decade, led by a fivefold increase in solar PV and wind deployment.

In the last decade, solar and wind competitiveness improved substantially, with offshore wind and solar PV joining the onshore wind in the range of costs for new fossil fuel capacity and increasingly out-competing them. 

Natural gas-fired power generation in the United States has been facing increased competition from renewable generation because of the record high-capacity additions to wind and solar power plants. 

With around 22.5 GW of combined net wind and solar electric generating capacity additions which came online in the US between May 2020 and Feb 2021, the renewables registered a 15% growth. The Energy Information Administration (EIA) stated that the consumption of natural gas for power generation will decline by 2% in 2023. The decline is attributed to the increasing electricity generation capacity from renewables.

Some of the other restraints

• Increasing pressure to phase out fossil fuels for power generation owing to climate change

Gas Turbine Market in the United States

The electricity consumption grew by 2% in 2021, and year-on-year growth was fastest in the first half of 2021 when the economy was returning to the pre-pandemic level. The retail sales and direct use of electricity are expected to grow by 0.6% in 2022 and 1.4% in 2023.

In 2020, the electric power sector accounted for about 38% of the total US natural gas consumption, and natural gas was the source of about 33% of the US electric power sector's primary energy consumption. Natural gas accounted for about 40% of the total utility-scale US electricity generation by all sectors in 2020.

The US industrial production index for electricity-intensive industries increased by 5.9% in 2021 after falling by 6.4% in 2020. This increase helped to raise US retail electricity sales to the industrial sector by an estimated 2.9% in 2020. The industrial production index is expected to grow by 4.1% and 2.5% in 2022 and 2023 respectively, leading to the forecast growth in industrial sector electricity use of 2.8% in 2022 and 1.7% in 2023.

With the boom in US shale since 2014, domestic crude oil production surged. Shale oil comprises more than a third of the onshore production of crude oil in the lower 48 states. It increased the oil output from 8.8 million barrels per day in 2014 to a record 12.2 million barrels a day in 2019.

The federal subsidies heightened the expected financial returns of investing in unconventional oil and gas development, helping to spur and sustain the US shale gas boom over the last two decades. 

Consumption of natural gas in the United States averaged 83.0 billion cubic feet per day (Bcf/d) in 2021, almost unchanged from 2020. According to Energy Information Administration (EIA), the consumption is expected to remain the same in 20200 and 2023.

The largest natural gas-consuming sector in the US is the electric power sector. In the power sector, low gas prices helped gas-powered power generation to gain share in the US and hold its own in Europe.

In Northern America, the natural gas-fired combined cycle (NGCC) power generation has grown steadily over the years. In 2018, NGCC surpassed the coal-fired plants as the technology with the most electricity generating capacity. As of 2021, the installed capacity of NGCC power generation reached 269.8 GW.

With the increasing demand for electricity and the availability of natural gas for power generation, the gas turbine market is expected to remain robust.

Regional analysis

Russia is the second-largest natural gas consumer in the world. The natural gas supplies to the domestic market are twice that of its export market. About 50% of the domestic natural gas is used for power generation and heat production. Though Russia has a huge potential to harness its wind power and other renewables, the growth of renewables is moving at a snail's pace due to regulatory issues.

Until the renewables takeover, it has to depend on its natural gas and other fossil fuels for its energy demands. Thereby the demand for gas turbines and its related services are expected to remain strong.

Natural gas is expected to play a key role in Africa's ambitious plan to provide electricity connection for nearly 600 million people without access to the grid. 

With 39% share, gas power dominates Africa's energy mix, followed by coal (29%), hydro (15%), and oil (10%). According to African Energy Outlook 2021, power generation on the continent is expected to increase by 25%, 55%, and 141% by 2025, 2035, and 2040 respectively, and the bulk of this supply will be natural gas-fired or LNG fired. 

Opportunities

The African continent is expected to have 527-558 Trillion Cubic Feet (Tcf) of gas at the end of 2019, making Africa the fourth-largest gas reserves holder. South Africa has proposed a 20-year Integrated Resource Plan (IRP), outlining a new power generation program to 2030. The program is set to use various renewable energies and natural gas to produce electricity.

With the present energy mix of Africa being dominated by gas power and its plan to scale up their natural gas production, it is considered to be emerging markets for the global gas turbine manufacturers. 

Impact of Covid Pandemic on Gas Turbine Market 

Covid pandemic hit industries and businesses globally and the gas turbine industry is no exception. The manufacturers suffered a huge setback in dispatches and order bookings. The restrictions in international markets and stringent travel curtailments resulted in considerable loss of order bookings and aftersales services.

The key players in the market have witnessed a decline in sales of gas turbines and after-sales services. The major OEMs are Mitsubishi Heavy Industries Ltd, Capstone Green energy Corp, Bharat Heavy Electricals Ltd, Caterpillar Inc, Kawasaki Heavy Industries Ltd, Opra Turbines, and others.

According to the IMF World Economic Outlook published in April 2021, the global growth is projected at 6% in 2021, moderating to 4% in 2022. The projections for 2021 and 2022 are much stronger than October 2020 World Economic Outlook. The growth indicates the additional financial support in a few large economies, anticipated vaccine-powered recovery, and continued adaptation of economic activity to somber mobility.

High uncertainty looms over this outlook, due to the probable third wave and evolution of financial conditions. The impact of the COVID-19 pandemic on the energy, automobile industries has already been profound.

Depending upon the path of the pandemic, capital availability, and financial conditions, utilities might postpone some of their generation investments, in turn affecting the gas turbines' market demand.

Recent Developments

• In Dec 2021, General Electric Co and Harbin Corporation will provide two heavy duty gas turbines to the Guangdong Huizhou power plant in China. The gas turbines can operate on blended hydrogen. 
• OPRA Turbines International B.V signs a partnership agreement with UNIVASTUM Ltd. Combined with OPRA’s OP16 gas turbine and UNIVASTUM’s unique modular WARP gasification technology is able to supply an economic and ecological solution for green energy generation without harmful emissions.

With the developments in gas turbine technology such as development of turbines which can run on hydrogen and natural gas blend and further attempts to develop a gas turbine capable of running on pure hydrogen will make the gas turbines market immune to the dominance of renewables.

Blackridge Research's Global Gas Turbine Market report provides insights into the current global and regional market demand scenario and its outlook. The study offers a detailed market analysis of various factors instrumental in affecting the growth of the global gas turbine market. Also, the study comprehensively analyzes the gas turbine market by segmenting it based on geography, and by power rating range (less than 40 MW, 40 MW to 100 MW, and above 100 MW).

The report also addresses present and future market opportunities, market trends, developments, and the impact of Covid-19 on the gas turbine market, important commercial developments, regions, and segments poised for the fastest-growth, competitive landscape. Further, gas turbines market size, demand forecast, growth rates, trade (imports and exports) will also be provided in the report.