Global gas generator market is huge

The global gas-fired generator market is currently worth US$15 billion annually, and will continue to increase in the coming years. Emerging market producers in Russia and elsewhere are also eager to force their way into the market, but it takes a long time and a lot of investment to catch up with the four giants of the developed countries.

Due to the use of "hydraulic fracturing" technology, shale gas extraction in the United States has developed rapidly, but it has led to the collapse of some large-scale drilling companies. On August 3, Australian company BHP Billiton announced that its valuation of some natural gas fields in the United States had fallen by nearly 3 billion U.S. dollars, which was due to the drastic increase in shale gas production that caused the price of natural gas to plummet.

Just three days later, US Chesapeake Energy Company revealed that its profits in the most recent quarter have dropped sharply due to oversupply of shale gas. However, if natural gas reserves are abundant and cheap, there will be more natural gas for power generation. This will also help those few companies that make large gas turbines.

Even if gas supply was not sufficient before then, gas-fired power plants have great advantages: they are quick to build, and they are cheap—the cost is only one-third of the cost of gas-fired power plants, and less than a quarter of nuclear power plants. Electricity and gas-fired power plants that produce the same unit emit less carbon dioxide than coal-fired power plants. In addition, coal produces various harmful gases including sulfur dioxide and mercury when it burns.

Last year, the United States passed a strict latest air pollution law, which will accelerate the phase-out of old coal-fired power plants. According to the United States SanfordC. Analysts at Bernstein Bank estimated that coal-fired power plants with generating capacity of 66 gigawatts (approximately 6.5% of total U.S. electricity generation) will be shut down by 2015. Natural gas will replace most of the coal. Countries with abundant reserves of shale gas, such as China and Australia, have not yet extracted such energy. When these countries start mining, some of the newly supplied shale gas will be used for power generation.

Therefore, the world's four largest gas turbine manufacturers - U.S. General, Siemens Germany, Mitsubishi Heavy Industries of Japan, and Alstom of France are looking forward to a large number of new orders coming in.

In the United States, this phenomenon has begun to take shape. Analysts at Bernstein Research believe that if the current trend can be maintained, 74 new gas turbine projects in the United States will begin to operate, which is an increase compared to 64 last year, but it is still lower than before the financial crisis. The degree of prosperity is even more incomparable with the soaring natural gas boom in 1999-2001.

This time, one of the reasons for the slowdown in the growth of the number of gas-fired power stations is that U.S. electricity regulators have ordered power companies to use more wind, solar, and other renewable energy sources. The power companies in many states have a large amount of unused capacity is another reason. The large-scale "light control" in the entire United States in 1998 caused various power companies to rush to establish new gas-fired power plants. However, when these power plants were formally put into operation, they unfortunately encountered the 2001 economic recession.

According to Bernstein Research, that is only the case in the United States: Although the United States used gas generators to account for 15%-20% of the world's total, it now accounts for only 8% due to the rise of emerging economies. Only 4% of China’s electricity-intensive power generation comes from gas-fired power generation, but this proportion is increasing rapidly. Both GM and Siemens have joint ventures in China. Iraq, Turkey, and Saudi Arabia may also build more gas-fired power plants. After the Fukushima nuclear power plant accident last year, Japan may also start a new repair of gas-fired power plants.

Bernstein Research estimates that the global market for gas-fired generators is now worth US$15 billion a year and will continue to increase in the coming years. Emerging market producers in Russia and elsewhere are also eager to force their way into the market. But in order to catch up with the four giants of the developed countries, it takes a long time and a lot of investment: Siemens and GM each invested about 500 million US dollars to develop the latest turbines. But even with strong financial support, potential competitors want to enter this market still need to overcome many obstacles.