U.S. gas turbine makers fear loss of market share

Gas turbine manufacturers in the United States say that increased federal spending on research should help them retain their current market dominance in the face of growing subsidies for foreign rivals.

The Gas Turbine Association (GTA), whose technology generates more than a quarter of U.S. electricity, held a press conference in Washington, D.C., Nov. 21 to support legislation by Rep. Paul Tonko (D-N.Y) that would accelerate research and development for more efficient gas turbines.

U.S. turbine manufacturers currently control 84% of the domestic market, but that figure could be cut in half by 2037 due to research subsidies being dispensed in places such as Japan and Europe, officials said.

The Tonko bill would authorize expansion of the Department of Energy (DOE) fossil energy combustion research. The Gas Turbine Efficiency Improvement Act (H.R. 2803) seeks to develop gas turbines that achieve 62% or simple cycle efficiency of 47% in the first phase of the program

Combined-cycle efficiency in recent commercial units is probably in the high-highs, and simple-cycles in the high-30s, GTA Chairman Robert Hilton, who is a vice president of Alstom.

A second phase would raise the targets to 65% for combined-cycles and 50% for simple-cycle units respectively, Tonko said.

The Tonko bill authorizes spending $50m per year for six years. In the case of a demonstration or commercial application activity funded by the proposed program, a match of 50% must be provided by a non-federal source.

Turbine association members would pump plenty of their own money into the effort, Hilton said.

“We know that research equals jobs,” Tonko said. To back this up, Tonko and GTA announced a new study by ICF International that indicates the type of research program proposed in the Tonko bill could create 36,000 additional manufacturing jobs for U.S. workers while reducing carbon dioxide (CO2) emissions.

New technology needed for ‘the age of gas’

“This is the age of gas,” Hilton said. “We need to keep this industry in the United States competitive,” the Alstom official added.

GTA lists 10 corporate members on its website, including such names as such as Alstom, General Electric (NYSE:GE), and Siemens. Such companies make turbines in the United States to serve about 84% of the domestic market.

But GTA says that this share could dwindle to 42% by 2037. That’s because foreign rivals are benefitting from significant subsidies. Japan in particular has turned very aggressive in investing in better gas turbines since the Fukushima nuclear accident of 2011, GTA officials said.

Improving the efficiency of gas power units will also curb CO2 emissions from electric generation, GTA notes.

A footnote to the ICF report noted that improving gas turbine efficiency is a big deal in many countries that have significantly higher delivered natural gas prices than does the United States.

The ICF study noted that Siemens opened Siemens opened a turbine manufacturing facility in the United States in 2011 and Alstom opened one in 2010.

The GTA-backed gas turbine R&D program, proposed by Tonko, would start in 2014 and run through 2020.

The ICF report is titled “Competitiveness of U.S. Gas Turbine Manufacturers.”

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.