The European power plant services market earned revenues of €3.59bn in 2013 but this will hit €4.14bn ($5.4bn) by 2020 according to a new report.
The study by analysts at Frost & Sullivan found that the market for steam turbines, gas turbines, heat recovery steam generators and boilers services is being driven by refurbishments to improve the operational flexibility of fossil-fired power plants.
It states that in Western European countries, “the lack of efficient and skilled labour is aiding the uptake of these services. In Eastern Europe, however, it is the low cost of services that encourage utilities to outsource a large proportion of their power plant services to specialist independent companies.”
Frost & Sullivan Energy & Environmental industry analyst Pritil Gunjan said: “Electricity demand from both mature and emerging European economies as well as the decommissioning of old conventional thermal power plants are driving the power plant services market.
“Extensive maintenance and repairs to ageing power plants to optimise utilisation will add to the opportunities for power plant service providers.”
The report, European Power Plant Services Market, states that new projects will be a mix of highly efficient coal plants – due to the falling prices of coal – and modern combined-cycle gas turbine plants.
“Among conventional thermal plant additions too, gas-fired power plants will hold the dominant share. This will boost the demand for power plants services from OEMs as they are better placed to service technologically complex gas turbines,” it says.
Gunjan confirmed: “As manufacturers develop novel gas turbines based on advanced technology, more customers will rely on OEMs for power plant equipment services.”
“Power plant service providers will also benefit from major utilities’ readiness to sign long-term service agreements for their newly built power plants.”
The report notes that “unfortunately, project financing continues to be below the pre-economic crisis levels. Relative decline in industrial and commercial activity has reduced power utilization in these sectors. Further, utilities, financial institutions and private investors are showing keenness to invest in renewable and efficient energy generation technologies rather than thermal and fossil-powered solutions.”
Gunjan noted: “Once the industrial climate recovers, power utilities and IPPs will register longer operational hours and find even more use for power plant services.
“Until such time, OEMs and ISPs will focus on renewing contracts, providing spare parts, and identifying fresh opportunities to survive in the concentrated competitive landscape.”