analysis of the asia pacific power plant services market and long-term market attractiveness

Analysis of the Power Plant Services Market and Long-term Market Attractiveness

Suchitra SriramProgram Manager - Energy and Power Systems, Asia Pacific

September 2011

2

Introduction

• Installed capacity additions as a result of growing electricity demand, technology advancements in main power plant equipment, existence of ageing fleet, and rising emission concerns from power plants are the key factors driving the power plant services market.

• Revenues from the steam turbine services market is expected to dominate due to a very large installed base of coal-fired power plants. Boiler servicing market is likely to grow at a rate similar to that of the steam turbine servicing market. Revenues from gas turbine servicing market is presently low but is expected to rise with increasing investments in gas turbine power plants.

• For power plants, operation and maintenance (O&M) spend can vary from 15.0 to 20.0 percent of the total life cycle costs, whereas equipment maintenance costs can vary between 10.0 and 15.0 percent of the total life cycle costs.

• Turnkey O&M service market in Southeast Asia and ANZ is at a nascent stage of growth and is likely to gain wider acceptance during the long term of the forecast period.

• Multinational original equipment manufacturers (OEMs) have forged alliances with utilities’ service subsidiaries and local service companies in several key markets that have huge potential.

3

Southeast Asia Power Plant Services Market

4

Drivers and Restraints

Power Plant Services Market: Key Market Drivers and Restraints (Southeast Asia), 2011-2017

Mar

ket

Dri

vers

Mar

ket

Res

trai

nts

1-2 years 3-4 years 5-7 years

Growing electricity production driving demand for power plant services

Adoption of advanced power generating technologies necessitates the need for long term service agreements

Long term service agreements with OEMs perceived to be expensive

Ageing power generation fleet provides high servicing opportunities

Preference for in-house maintenance of power plants curbs outsourcing opportunities

Increasing presence of IPPs and SPPs favor services outsourcing

Slow progress of power sector reforms hinders services market growth

Impact: High Medium LowSource: Frost & Sullivan analysis.

5

Power Plant Services Market Revenue Forecast

Key Takeaway: Revenue growth is fueled by new capacity additions and repowering, renovation, and modernization of old power plants

Power Plant Services Market: Revenue Forecast (Southeast Asia), 2007–2017CAGR = 8.8%

Note: All figures are rounded. The base year is 2010. Source: Frost & Sullivan analysis.

6

Power Plant Services Market Revenue Forecast (continued)

Key Takeaway: MRO services dominate the power plant servicing market driven by critical repairs and spare parts supply


7

End-user Analysis By Country

End -user

Malaysia Indonesia Singapore ThailandThe

PhilippinesVietnam

Thermal Capacity

(%)

Revenues (%)

Thermal Capacity

(%)

Revenues (%)

Thermal Capacity

(%)

Revenues (%)

Thermal Capacity

(%)

Revenues (%)

Thermal Capacity

(%)

Revenues (%)

Thermal Capacity

(%)

Revenues (%)

Utilities 34.5 28.3 73.3 53.6 --- --- 34.9 25.3 4.3 9.6 76.7 64.0

IPPs 65.5 71.7 26.7 46.4 100.0 100.0 65.1 74.7 95.7 90.4 23.3 36.0

Key: IPPs - Independent Power Producers

Power Plant Services Market: Percent of End-user Revenues by Thermal Installed Capacity (Southeast Asia), 2010


8

Competitive Analysis—Market Share


9

Australia and New Zealand (ANZ) Power Plant Services Market

10

Drivers and Restraints M

arke

t D

rive

rsM

arke

t R

estr

ain

ts

1-2 years 3-4 years 5-7 years

Evolution of the national electricity market necessitates efficient O&M of power plants in Australia

Adoption of advanced power generating technologies necessitates the need for long-term service agreements

Lack of clarity on carbon policy restricts the market growth

Installed capacity additions and old power plants’ life extensions drive the demand

In-house maintenance of power plants checks outsourcing opportunities

Low electricity prices deter new investments in the power sector

Impact: High Medium Low

Power Plant Services Market: Key Market Drivers and Restraints (ANZ), 2011-2017

Source: Frost & Sullivan analysis.

Growing penetration of renewable energy plants limits servicing opportunities for conventional power plants

11

Power Plant Services Market Revenue Forecast

Key Takeaway: Spare parts supply constitute almost 70.0% of the market revenues

Power Plant Services Market: Revenue Forecast (ANZ), 2007–2017CAGR = 4.9%


12

Power Plant Services Market Revenue Forecast (continued)

Key Takeaway: Revenues increase in proportion to commissioning and capacity utilization of power plants


13

End-user Analysis by Country

End-user Australia New Zealand

Thermal Capacity (%) Revenue (%) Thermal Capacity (%) Revenue (%)

Utilities 60.0 51.5 42.0 34.6

IPPs 40.0 48.5 58.0 65.4

Key: IPPs - Independent Power Producers

Power Plant Services Market: Percent of End-user Revenues by Thermal Installed Capacity (ANZ), 2010


14

Competitive Analysis—Market Share


15

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16

For Additional Information

Donna JeremiahCorporate CommunicationsAsia Pacific+603 6204 [email protected]

Carrie LowCorporate CommunicationsAsia Pacific+603 6204 [email protected]

Suchitra SriramProgram ManagerEnergy & Power [email protected]

analysis of the asia pacific power plant services market and long-term market attractiveness

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