The Chinese power plant services market is forecast to reach US$5.96 billion by 2012, according to a research report by analysts Frost & Sullivan.
Analyst Bharath Srinivasan says the Chinese plant services market generated revenues worth US$3.05 billion in 2005, with 93% generated from maintenance repair and overhaul (MRO) activity on steam turbine power plants. The remainder was earned on gas turbine MRO services. The majority of revenues stemmed from thermal power plant services, with a smaller amount from industrial power plants, he says.
According to Srinivasan, there are three tiers of competitor in the Chinese plant services market. Forming the base, with the maximum portion of the market, are the utility affiliates or service subsidiaries of power companies, and other independent service providers such as Huainan Pingxu Power Overhaul Company and Liaoning Qunqhe Power Maintenance Co., Ltd.
The second tier is the major domestic OEMs – Harbin Power Equipment Corporation, Dongfang Electric Corporation and Shanghai Electric Group Co.
Finally, the multinational OEMs – of which Alstom, GE Energy, Siemens, Mitsubishi Heavy Industries and Babcock & Wilcox are the most active – form the top tier, with the majority of them working in association with domestic power equipment companies.
Srinivasan says a lively market for turnkey operation and maintenance (O&M) is beginning to emerge. “Independent power producers, commercial and industrial plants are wanting to adopt O&M services due to scarce human and material resources,” he says.
From an environmental point of view, Srinivasan says a few players, such as Alstom, are now promoting environmental services as “value added” part of the O&M package. “Most O&M services will be sold because of the environmental benefits over others,” he says.
Traditionally in China, O&M is done in-house, and it has been difficult to persuade management to outsource – but this may change as OEMs and independent O&M providers give offers of environmental performance upgrade, says Srinivasan.
Bharat says there is a significant labour shortage in China with regard to power plant service. But, he says, for foreign companies wishing to do business in China, it is “essential to have a partnership with a local Chinese company.”