LONDON, May 12 /PRNewswire/ -- After hitting a trough in 2003, the $2.3
billion European steam and gas turbines market is on the upswing. The
escalating demand for electricity particularly from central and eastern
Europe (CEE), the decommissioning of both old conventional thermal power
plants as well as nuclear power facilities, and the need to achieve greater
efficiency and competitiveness are set to push revenues to nearly $16.9
billion in 2011.
    Anticipated capacity additions in Spain and Italy in western Europe along
with Turkey in the CEE region are set to underpin particularly strong market
growth over 2005-2006. The market is forecast to expand steadily over the
long term as well. An estimated annual growth of 12.3 GW is projected to
occur over 2005-2011, amounting to a total capacity of 86.558 GW.
    While the rising need for electricity in western Europe - particularly in
the Netherlands, France and Italy - is expected to continue contributing to
the demand for new turbines, it is the CEE region that is expected to be the
'growth engine' in the medium to long term. Here, principal growth drivers
are likely to be the tough environmental norms, efficiency imperatives and
the sharply rising demand for electricity.
    At the same time, the deteriorating energy infrastructure in CEE
countries is poised to provide significant opportunities for plant
repowering. Such repowering is expected to ensure that these countries meet
EU's emission standards. It is also likely to boost efficiencies, thereby
enabling competitiveness in the common EU electricity market.
    Market development is also likely to be advanced by the decommissioning
of old thermal power plants to meet EU legislative directives governing
coal-based plants. "While this may be less of an imperative in the short term
in the CEE, since the gas supply infrastructure in these countries may not be
up to the mark, it is poised to become more pressing as the integration with
the EU progresses and other countries subject to such norms call for complete
harmonisation in rules," notes Frost & Sullivan (http://frost.com) Research
Manager Harald Thaler.
    Also, the decommissioning of several nuclear power plants in CEE is
expected to spur fossil fuel fired generation creating opportunities for
steam and gas based technologies.
    With biomass gaining in popularity as a potential electricity generation
source, a number of developmental, biomass-based power projects have been
commissioned in Scandinavia and CEE countries. This is likely to result in
greater emphasis on distributed generation and greater focus on smaller steam
and single-cycle gas turbines and their efficiencies.
    Indeed, smaller turbines are expected to increase their share of the
total demand, driven by liberal electricity markets, incentives to
cogeneration and declining costs. However, the medium range turbine segment
is likely to continue as the favourite output segment.
    The market is expected to remain tilted towards gas turbines both in
terms of revenue and total MW capacity addition. Additions in gas based
capacity in southern Europe and increasing government encouragement of
distributed generation based on natural gas are expected to push the total MW
capacity addition of gas based turbines over the period 2005-2011 to 61.4 per
cent. Moreover, gas based turbines are likely to account for three-fourths of
revenues generated in the European steam and gas turbines market by 2011.
    Despite intense competition, expanding opportunities - both in western
Europe and the CEE region - are set to provide growth potential to all market
participants. "Pitted against the technological edge of western regional
original equipment manufacturers (OEMs) will be the entrenched, but
admittedly vulnerable, positions of regional CEE OEMs, and joint ventures and
partnerships may become increasingly common," says Mr. Thaler.
    At the same time, deregulation in the electricity market is likely to
provide both opportunities and challenges to the European gas turbines
market. Companies will benefit due to the inherent features of gas turbines
such as lower gestation period, higher efficiency, and availability and
greater flexibility to be used for both base-load and peak-shaving operations
- features that a competitive market values more than the normal monopolistic
market structure. However, it also shifts more risks towards the OEM for the
equipment supplied.
    "In less developed countries of CEE, it might even be necessary for the
OEM to contribute to the project equity in order to enable the financial
closure. This would then make not just the technology but current financial
strength of the OEM also a critical factor," concludes Mr. Thaler.
    If you are interested in a summary of this research service providing an
introduction to the European Steam and Gas Turbines Market, please send an
email to Magdalena Oberland, Corporate Communications at
magdalena.oberland@frost.com with the following information: full name,
company name, title, country, contact telephone number, email and source of
information. Upon receipt of the above information, an overview will be
emailed to you.
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    For further information, please contact:
    Magdalena Oberland
    Corporate Communications
    P: +44-(0)-20-7915-7876
    E: magdalena.oberland@frost.com


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