Heat Recovery Steam Generator (HRSG) Market to 2020 - Market Shifts from Asia-Pacific to Middle-East, Driven by Focus on CCGT Plants and Equipment Replacement/Retrofit

Additional Information

GBI Research’s report, “Heat Recovery Steam Generator (HRSG) Market to 2020 - Market Shifts from Asia-Pacific to Middle-East, Driven by Focus on CCGT Plants and Equipment Replacement/Retrofit” provides an in-depth analysis of the HRSG market in selected countries in the following regions: Asia-Pacific (India, China, Japan, Australia, Republic of Korea and Taiwan), Europe (the United Kingdom, Germany, Spain, Italy and the Russian Federation), North America (the United States and Canada), and the region comprising the Middle East and Africa (Saudi Arabia, Iran, the United Arab Emirates, Nigeria and South Africa). The report analyzes trends and factors affecting the global HRSG market. It provides a detailed forecast to 2020 of the unit shipment, market revenue and pricing of the HRSG market for each of these countries. It also provides information on the competitive landscape and market shares of some of the major companies in these countries.

This report is built using data and information sourced from proprietary databases, primary and secondary research and in-house analysis by GBI Research’s team of industry experts.

Growing Environmental Concerns and Increasing Electricity Demand Driving the Global HRSG Market

The demand for electricity across the globe is interlinked with economic growth and development. Governments and utilities face the challenge of increasing their power capacities to keep pace with economic growth, while at the same time minimizing any environmental impact. Combined Cycle Gas Turbine (CCGT) power plants are widely considered key to a cleaner thermal power sector, and the global community is, as a whole, turning away from environmentally harmful technologies like coal with international agreements like the Kyoto Protocol. This shift towards cleaner and more energy-efficient options for power generation has resulted in the growth of the HRSGs market, as they are used in CCGT plants.

The growing demand for greater efficiency and the availability of large government incentives and rebates for improved energy efficiency and emissions reductions are expected to sustain the HRSG market’s growth. Economic activity and growth around the globe, especially in developing countries like India and China, will increase the demand in the HRSGs market as countries and utilities opt for cleaner thermal power.

Lowered Demand for New Installations in the Aftermath of the Economic Downturn Poses Challenge for the HRSG Market Until 2015

A decline was witnessed in power demand in 2009 and thereafter due to the global economic downturn which adversely affected natural gas prices, creating downward pressure on new investments worldwide. At present there is a lower demand for new installations with cancellations or delays of utility programs due to financing issues. This is expected to result in a gradual decline in sales in the HRSG market during the period 2011-2015. Sustainable recovery is still uncertain, indeed, there remains a significant concern that the global economic recovery from 2008 could stall, inhibiting investments in this sector. Major HRSG markets such as the US and India are significantly impacted by the declining economics and subsequent factors such as increase in natural gas prices.

Increasing Price Competition in the HRSG Market

Most of the global HRSG market is controlled companies such as Nooter/Eriksen Inc, Doosan Heavy Industries & Construction Co., Ltd., NEM B.V., General Electricals and Vogt Power International Inc. There is strong competition between these manufacturers for more market share. Tier one manufacturers are likely to dominate this market as they have the capability to integrate HRSG systems with other products, thereby providing different end-user sectors with total solutions.

One of the major challenges facing the HRSG manufacturers is the lack of product differentiation. Many of the European and North American manufacturers face tough competition from their Asian counterparts on account of the latter’s low-priced products. The equipment of these companies is sold at comparatively lower prices compared to the average price in the market and as a result they capture a significant portion of the market share. Since the products manufactured by these companies are identical to those produced by European and North American manufacturers, it is critical for the European and North American manufacturers to retain their market share through efficient product differentiation. Once a unique product strategy is adopted, the global manufacturers will be able to thrive by establishing a market that will filter out the non-domestic participants and thereby strengthen their market share.

Shift from Asia-Pacific to Middle East Market in Future Driven by Heavy Investments

The Middle East is expected to witness strong positive growth in future. The region being rich in oil and natural gas reserves has enough growth opportunities for power generation through natural gas, and consequently for the HRSG market. By 2020, the unit shipment volume is expected to reach 70 units. Heavy investment plans and lucrative policies are anticipated to drive the market. Iran and Saudi Arabia are expected to contribute the most to the growth of the HRSG market.

The Middle Eastern countries encourage foreign investment, especially in the generation segment of the power sector. According to a recent study, it has been estimated that Iran will contribute 17% to the Middle East and Africa’s regional power generation within the next three years. Though foreign investments declined all over the world, Iran has been able to pull a lot of foreign investments especially in power sector. The country’s Foreign Investment Package law supports foreign investments and offers investments in Build-Own-Operate (BOO) and Build-Operate-Transfer (BOT) based power projects. The UAE invested $720m in the construction of a Combined Cycle Power Plant (CCPP) and gas power plant in Shiraz and Isfahan, while Germany invested $445m in a combined cycle power plant in Pareh-Sar.

Saudi Arabia is the fastest growing economy in Arabia. With its increasing population and industrialization, the demand for electricity there is also increasing. By 2020, the country will require almost 55,052 MW of generating capacity to meet the population’s demands. Coupled with this, the focus is shifting from oil to natural gas for power generation, natural gas being the cleanest fossil fuel. In response to this, the government is anticipated to invest around $119m by 2020 in the power sector. It has made substantial efforts to create a lucrative and viable environment for investments by private players. It is aggressively promoting foreign investment in the development of natural gas to meet demand. With the right policies in place, the power sector is expected to be driven by private investments in future.

HRSG Market, Asia Pacific and Middle East and Arfica, Market Revenue ($m), 2000-2020

Source: GBI Research