Refurbishments to improve the operational flexibility of fossil-fired power plants are driving the mature European power plant services market. In Western European countries, the lack of efficient and skilled labour is aiding the uptake of these services. In Eastern Europe, however, it is the low cost of services that encourage utilities to outsource a large proportion of their power plant services to specialist independent companies.

New analysis from Frost & Sullivan, European Power Plant Services Market, finds that the market earned revenues of €3.59bn in 2013 and estimates this to reach €4.14bn in 2020. The study covers steam turbines, gas turbines, and heat recovery steam generators and boilers services. Power plant services are provided by original equipment manufacturers (OEMs) as well as independent service providers (ISPs) to utilities and independent power producers (IPPs).

“Electricity demand from both mature and emerging European economies as well as the decommissioning of old conventional thermal power plants are driving the power plant services market,” said Frost & Sullivan energy and environmental industry analyst Pritil Gunjan. “Extensive maintenance and repairs to ageing power plants to optimise utilisation will add to the opportunities for power plant service providers.”

New projects will be a mix of highly efficient coal plants – due to the falling prices of coal – and modern combined-cycle gas turbine plants. Among conventional thermal plant additions too, gas-fired power plants will hold the dominant share. This will boost the demand for power plants services from OEMs as they are better placed to service technologically complex gas turbines.

“As manufacturers develop novel gas turbines based on advanced technology, more customers will rely on OEMs for power plant equipment services,” confirmed Gunjan. “Power plant service providers will also benefit from major utilities’ readiness to sign long-term service agreements for their newly built power plants.”

Unfortunately, project financing continues to be below the pre-economic crisis levels. Relative decline in industrial and commercial activity has reduced power utilization in these sectors. Further, utilities, financial institutions and private investors are showing keenness to invest in renewable and efficient energy generation technologies rather than thermal and fossil-powered solutions.

“Once the industrial climate recovers, power utilities and IPPs will register longer operational hours and find even more use for power plant services,” noted Gunjan. “Until such time, OEMs and ISPs will focus on renewing contracts, providing spare parts, and identifying fresh opportunities to survive in the concentrated competitive landscape.”