Gas turbines are primarily used for power generation. Operating a simple cycle turbine power plant for supplying electricity to the industry is much costlier than purchasing it from outside. Thus, combined cycle power plants are mostly employed, which have better efficiency. CHP plant is an example of a combined cycle power plant, which can be employed for electricity production as well as for obtaining mechanical drive. The paradigm shift to gas-based power generation from coal-based in developed and developing economies such as the United States, Japan, India, and China, as well as supportive government policies for gas-based power plant construction, are major factors enabling market growth.
The U.S. market for gas turbines is projected to witness substantial growth, aided by increasing government support for power generation technologies that focus on the reduction of carbon dioxide emissions. Major factors leading to the move from coal-based to gas-based power generation are convenient economics and supporting regulations & policies to set up gas-based power plants in the nation. Moreover, an assurance of long-term availability of fuel supply in the United States is another vital factor enabling market expansion. Gas turbines play a leading role in reducing greenhouse gas (GHG) emissions. As compared to other combustion-based electricity generation applications, gas turbines are very proficient and also result in decreasing carbon emissions.
Execution of numerous climate change initiatives along with regulations to cut down GHG emissions are expected to lead to a surge in the potential for gas turbines over the forecast period. Lockdowns in major cities and economies have caused most industries around the world to shut down, effectively halting production. As a result, the demand for oil and gas decreased around the world. Furthermore, as a result of the global pandemic, electricity consumption from industrial and commercial end-users decreased significantly. Thus, the demand for gas turbines was impacted during that period.
Market Dynamics
Growing demand for power generation through clean energy sources is expected to drive the gas turbine industry. As per the United Nations, in 2022, the global population reached 8 billion, of which around 775 million people were deprived of electricity. Also, according to the UN, the world population is expected to climb to 8.5 billion by 2030, pushing energy requirements even further. Natural gas is considered widely to be a transitional power source between fossil fuels such as oil and coal and renewable sources such as wind and solar. This is because natural gas greatly reduces the level of carbon emissions, in comparison to other conventional power sources such as oil and coal. The market is poised to expand during the assessment period due to rising awareness regarding sustainable energy sources.
On the other hand, renewable energy sources, such as wind and solar, are increasingly becoming cost-competitive with traditional fossil fuel-based energy sources. This trend can result in a reduced demand for gas turbines, especially in the power generation segment. Additionally, several gas turbines are reaching the end of their operational lives, highlighting the need for their replacement or refurbishment. This can prove to be costly and time-consuming, reducing the demand for new gas turbines in the short term.
Capacity Insights
The >200 MW segment emerged as a significant capacity segment in this market with a revenue share of more than 73.0% in 2023. It is further projected to be the fastest-growing segment during the assessment period. The increasing pace of power generation operations globally due to high energy demands on account of population growth & rapid urbanization, along with a move from coal to gas-based power plants in some of the world’s major economies, are driving segment demand. The expansion of the power generation space, coupled with a higher focus on using renewable energy sources for electricity generation, is a primary driver for gas turbines, especially those with capacities higher than 200 MW.
The reduced turbine size allows for easier operation and maintenance, which is a crucial factor in the expansion of the 200 MW-capacity turbine segment. A smaller size leads to a lighter product, making it well-suited for offshore locations where the power-to-weight ratio is vital in deciding whether or not to build a turbine unit. The oil & gas industry is expected to restore its impetus in the coming years. On account of their compliance with operational and environmental circumstances, small turbines are frequently used in this industry.
Technology Insights
The combined cycle turbines segment accounted for the largest revenue share of more than 88.0% in 2023 and is anticipated to continue its dominance during the forecast period. This category is also expected to grow at a faster rate in the coming years. These turbines use less fuel to produce the same amount of energy and eliminate transmission and distribution losses. Combined cycle turbines are known to be extremely efficient, allowing systems to achieve efficiencies of 60 to 80 percent. Strict regulations for coal plants, low gas prices, and integration of increasing amounts of renewable energy are driving the shift to combined cycle gas turbine technology.
CCPPs complement solar and wind power as they can start and stop at a rapid pace, enabling them to compensate for changes in renewable energy power. Government initiatives pushing the use of sustainable fuels for electricity generation and reducing GHG emissions are expected to advance the demand for natural gas-fired power plants over their coal-fired counterparts. Additionally, the industry growth is poised to be driven by reducing gas prices and the discovery of shale gas reserves during the projection period.
End-use Insights
The power & utility segment accounted for the largest revenue share of approximately 90.0% in 2023. Increased demand for power generation is being driven by the expansion in population and urbanization around the world, which is boosting the use of gas turbines in the power and utility sectors. Another important driver includes the focus on establishing an environment-friendly form of power generation. The product demand in the power & utility end-use segment is anticipated to progress at a significant growth rate over the forecast period; however, key competitors are still skeptical regarding the growing product demand in the power generation segment.
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