INCORPORATION OF PWPS WITHIN MHPS AMERICAS WILL STRENGTHEN POSITION OF FT4000 INDUSTRIAL GAS TURBINE
NEWTOWN, Conn. -- The decision last year to integrate Pratt & Whitney Power Systems (PWPS) operations within Mitsubishi Hitachi Power Systems (MHPS) Americas will provide added strength to the market position of the FT8 and FT4000 gas turbines, and will help them withstand the overcapacity blizzard that is now chilling the entire market for power generation gas turbines.
The incorporation of PWPS is part of a major restructuring effort of MHPS to accommodate the slumping demand for power generation capacity. It would appear that the company has been responding well to a hostile market environment.
While we expect current market conditions to continue impacting sales of the FT4000 in the short term, the advantages of these gas turbines should help recoup these losses over the medium and long term.
The political focus on using renewable resources for power generation has resulted in the construction of these facilities being heavily subsidized, with further subsidies being paid to cover their operational expenses. As a result, existing power generation plants have been running at a loss and, in Europe in particular, many new simple-cycle gas turbine plants were mothballed prior to being made operational. These constitute a reserve of generation capacity that will depress demand for new procurement in the short term.
As experience with the operation of renewable resource-based power generation capacity has grown, the need for some form of pealing and reserve power capacity has become obvious. This is particularly the case in South Australia, where baseload fossil-fueled power plants are being progressively shut down in favor of wind and solar with the aim of reaching a 50 percent renewable energy usage. There is potential for a shortfall of up to 600-800 MW of generating capacity in South Australia with existing gap-filling facilities only likely to be able to fill this need for some 20 minutes before blackouts become unavoidable. The FT4000 would seem to be a viable and effective solution for this kind of requirement.
Another potential market area is the floating production, storage, and offloading platform (FPSO) for offshore oil exploration and the equivalent floating liquefied natural gas (FLNG) platforms for the gas industry. These ships allow the exploitation of offshore reserves of oil and gas where seabed or oceanographic considerations prevent the use of more traditional technologies. These platforms also require rapid startup and flexible operation, making the FT8 and FT4000 well-suited to these applications.
The FT8 is a versatile unit that has proven itself in the industry. However, the bulk of its sales have been in the U.S. and occurred during the deregulation peak in the early 2000s. Sales on the export market have been only a minor component of product sales, and total sales in general have dropped significantly. Nevertheless, the Algerian order shows that the FT8 and the FT4000 have the presence to gain the necessary orders, given the opportunity. Forecast International believes that the FT8 will remain a sound program, but it is operating in a highly competitive market and faces strong, well-entrenched opposition from the GE LM2500, LM6000, LMS100, and from Siemens engines.
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