Power Plants market development
Power Plant markets remained solid in 2010
The Power Plants market activity continued at a good level during the fourth quarter of 2010. The orders were predominantly for small and medium size projects. Industrial output is increasing in most emerging markets which, in combination with population growth and enhanced standard of living, is driving the need for more power generation. The installed base of wind power generation has also increased, which is creating a need for flexible power generation. The financial crisis led to the postponement of investments for power generation in 2009, and this is now creating demand in several markets.
Power generation market overview
As energy consumption grows, the need for both new power generation equipment increases, as does demand for replacement equipment for older capacity. Today, the global installed power generation capacity totals approximately 4,700 GW, out of which over half is in OECD-countries. Going forward, growth is expected to be stronger in non-OECD countries, due to increasing industrialisation and higher living standards. The majority of Wärtsilä's Power Plants business derives from these emerging markets. Heavy fuel oil (HFO) has traditionally been the dominant fuel for power generation in emerging markets but demand for gas driven plants increases along with the introduction of gas networks. OECD-countries have focused on the development of wind power and increasing the share of natural gas power generation with the target to ramp down old coal based installations. In the USA, the introduction of shale gas has been rapid, and has made the natural gas prices very competitive. Wärtsilä is the only player in the market with such a broad gas engine portfolio within its power range.
Power Plants market position
The size of Wärtsilä's target markets is approximately 15,000 MW and Wärtsilä's yearly delivery volumes are 2,500-3,000 MW. The development of the heavy fuel oil driven power plants market, where Wärtsilä has a market share of over 50%, is rather stable whereas the market for gas driven power plants is growing. Wärtsilä has a market share of over 60% in the gas engine driven power plants. Wärtsilä is continuously strengthening its position in the gas market, by capturing market share from other technologies and currently has 14% of the market including both gas engines and gas turbines.