Assessing the industry’s new shape15 March 2000
The hydrogenerator market is making a strong showing in refurbishment projects, but new projects are increasingly rare. Will the restructuring of the last year be sufficient to maintain the industry?
Examining the generator contracts placed since 1996, and listed in International Water Power & Dam Construction’s Yearbook tells a tale of an industry changing markedly over the last few years.
In 1996 and 1997 contracts were being placed for equipment at several world-beating dam projects, and that meant orders for generators were placed as well.
In 1996 Iran came sharply into focus when it awarded contracts for both its largest projects, and awarded them both to va-tech Elin. The company supplied 8x263MVA machines for Karun 3 and four similar units for Masjed e Soleiman. Elsewhere there were large projects still under way: Ansaldo was successful in Brazil. For example, it won contracts to supply 5x315MVA machines to Ita 1-5, and 4x345MVA generators to Salto Caixas.
Contracts for big projects were still being placed in 1997. For example, ABB Power Generation won the contract to supply generators for eight units at China’s huge Three Gorges plant, where capacities totalled over 6000MVA. Another tranche of Three Gorges contracts was won that same year by Siemens: three generators each rated at 840MVA. Ansaldo still had customers to serve in Brazil, where five more 305MVA units were contracted for the second phase of Ita.
By 1998, IWP&DC’s figures show that refurbishment projects had begun to take a larger share of the market. Some 30 refurbishment projects placed generator contracts totalling 1302MVA. The market for new plants was still ahead, with contracts placed for 55 units, totalling some 3506 MVA. While some large projects were still around, the shift to smaller projects was marked: in new plant building generators averaged 63MVA in size, while refurbished projects were smaller still, averaging 43MVA. The simple numbers of contracts placed reveals starkly why the industry has seen so many major acquisitions and mergers in the last 18 months. Siemens and Voith Hydro; ABB Power Generation and alstom; VA Tech and Sulzer Hydro; GE and Kvaerner are all trying to convert a single large order each year and a sprink-ling of minor contracts into an economic business.
The figures for 1999 contracts confirm this trend. Figures provided by the companies show the largest share of business going to the new grouping of ABB Alstom. The group won contracts for 85 hydrogenerators that year. Of that total, more than half — 52 — of the units were provided to plants that were being refurbished. The 33 new units reveal very clearly where the focus will be for the dam industry in this century: 12 of the new units will be installed in South America (eight in Brazil and four in Chile), and four will be in China (at the Bei Xi and Xia Yang plants). The new units average power is greater than that of the refurbished units, 89MVA, compared to 67MVA. The refurbished units cover a spectrum of countries that reflects the distribution of the industry in previous decades, being fairly evenly split between Europe, the US, Australasia and the rest of the world.
VA Tech Elin and Siemens were fairly even in their sales for the year, signing contracts for 11 and 10 units, respec-tively. New units were again heavily biased: VA Tech Elin’s units went to new plants at Borcka, Kürtün and Muratli in Turkey, and to Gilgel Gibe in Ethiopia. Contracts for three units were signed for a refurbishment project at the Fifth de Novembre plant in El Salvador. Similarly with Siemens: contracts were signed for Cana Brava (three units) and Porto Estrela (two units) in Brazil and for Sucati (two units) in Turkey. The company’s final sale was to the Bapsa II plant in India (three units).
IMPSA’s familiarity with the South American market might be thought to place it well for contracts in that region. In fact, the company’s generator contracts in 1999 were all in the Philippines. Two units will be provided for the new Kala-yaan 1 station, and three refurbishment projects — Botocan, Caliraya and Kalayaan 1 — signed contracts for two units at each plant.
Ready for the new market
It is perhaps too early to tell whether the wholesale restructuring in the hydro market will allow all the remaining companies to survive. The final verdict on hydrogenerator suppliers, as on the turbine and governor suppliers whose contracts are also listed in the Yearbook, will not be apparent until more time has elapsed.
That there is continuing pressure on the hydro market, and elsewhere in the general power market, is illustrated by the plans announced by ABB Alstom Power on 1 March this year to continue to reduce its workforce. The company expects to reduce its number of employees by 10,000 worldwide, with some 5400 of the job losses in Europe. In its announcement ABB Alstom Power blamed ‘a continuing shift from steam based power generation to gas’. The result has been a 30% reduction in the volume of steam-related businesses and the kind of manufacturing overcapacity that makes restructuring a necessity.
It is in steam related businesses that the axe will fall most heavily this time, but few in the power business will deny that the pressure of gas fired generation is felt just as much in the hydro sector, where the comparison is between construction times, rather than fuel prices. Manu-facturing overcapacity is as keenly felt in hydro as in steam; if the industry cannot offer fast, competitive hydro construction the most recent wave of restructuring may not be the last.