Microturbine Systems Market Analysis

Market Overview

Microturbines are new distributed generation technology that is used for stationary energy generation applications. These turbines can produce both heat and electricity on a relatively small scale. A microturbine runs on various types of fuels including biogas, diesel, natural gas, alcohol, hydrogen, and LPG.  It can generate power from 25 kW to 1000 kW and can be used in commercial, residential, and industrial sectors. The majority of the applications of microturbines are in the industrial (mining, oil & gas, wastewater plants, and land rigs) and commercial sector (hotels, office buildings, schools, sports centers, supermarkets, swimming pools, and hospitals) due to the benefits they offer.

The global microturbine systems market is estimated to account for US$ 1,239.7 Mn in terms of value by the end of 2027.

Market Dynamics- Drivers

1. Favorable government regulations are expected to drive growth of the global microturbine systems market during the forecast period

Renewable energy resources have very little impact on the environment and are present in abundance. However, current technologies cannot adequately tap and utilize renewable sources to generate power. On the contrary, non-renewable sources of energy such as oil & gas, and coal-fired power plants although contribute to most of the power generation, produce the environment significantly. According to the U.S. Energy Information Administration, global carbon dioxide emissions were over 30 billion metric tons in 2010 and were expected to reach over 35 billion metric tons by 2020.  This, in turn, has increased the development of alternate energy generation techniques including microturbines. Thus, these factors are expected to drive growth of the global microturbine systems market during the forecast period.

2. Few movable parts restricting overhaul cost supplemented with numerous applications is expected to propel the global microturbine systems market growth over the forecast period

Microturbine systems have very few movable parts, which leads to low operation and maintenance costs comparative to reciprocating and other substitute energy generating systems. Engine-based generators comprised of hundreds of moving parts that require scheduled overhaul, which in turn, impact energy production and increasing maintenance costs. Once installed, microturbine systems can run up to 5,000 hours to 8,000 hours. As a result, microturbines are preferred in several energy-intensive industries as a secondary and primary source as well. Thus, these factors are expected to propel the global microturbine systems market growth over the forecast period.

Statistics:

North America held dominant position in the global microturbine systems market in 2019, accounting for 45.9% share in terms of value, followed by Europe, Asia- Pacific and RoW respectively.

Figure 1: Global Microturbine Systems Market Share (%), in terms of Value, By Region, 2019

Market Dynamics- Restraints

1. Volatile fuel prices are expected to hamper the global microturbine systems market growth over the forecast period

Currently, natural gas is widely used in microturbines as fuel. Since the natural gas price is fluctuating constantly, it poses threat to microturbine manufacturers. Furthermore, the energy generated by microturbines and reciprocating engines incurs comparatively the same cost. However, advanced supercritical CO2 systems that generate energy at a lower cost are expected to offset the challenge with minimal utilization of natural gas and adequate energy generation. Hence, these factors are expected to hamper the global microturbine systems market growth over the forecast period.

2. High level of competition from emerging entrant and established players is expected to hinder the global microturbine systems market growth over the forecast period

Emerging market players are posing major competition to existing market players. New entrants are offering microturbine systems at a competitive cost as compared to major manufacturers, which in turn, is hindering the market share of key players. Furthermore, market players are struggling to expand their presence due to the presence of various regional players. Hence, these factors are expected to hinder the global microturbine systems market growth over the forecast period.

Microturbine Systems Market Report Coverage

Report Coverage	Details
Base Year:	2019	Market Size in 2019:	US$ 440.8 Mn
Historical Data for:	2016 to 2019	Forecast Period:	2020 to 2027
Forecast Period 2020 to 2027 CAGR:	13.8%	2027 Value Projection:	US$ 440.8 Mn
Geographies covered:	North America: U.S., Canada Latin America: Brazil, Argentina, Mexico, Rest of Latin America Europe: Germany, U.K., Spain, France, Italy, Russia, Rest of Europe Asia Pacific: China, India, Japan, Australia, South Korea, ASEAN, Rest of Asia Pacific Middle East: GCC Countries, Israel, Rest of Middle East Africa: South Africa, North Africa, Central Africa
Segments covered:	By Application: CHP Generation, Standby Power. By End-use: Industrial, Commercial, Residential.
Companies covered:	Capstone Turbine Corporation, NewEnCo Ltd., Elliot Company Inc., Micro Turbine Technology BV, FlexEnergy Inc., Ingersoll-Rand Company, and Global Microturbine LLC.
Growth Drivers:	Few movable parts restricting overhaul cost supplemented with numerous applications Favorable government regulations
Restraints & Challenges:	High level of competition from emerging entrant and established players Volatile fuel prices

Market Opportunities

1. Technological advancements can present lucrative growth opportunities in the global microturbine systems market

Some of the microturbine manufacturers such as Capstone Turbine Corporation have expanded their product offerings in the marine market by offering LNG/diesel-fueled marine microturbines and methane-fueled C200 microturbines. These two developments are a result of extensive research and development by the company and are expected to lower operational costs of microturbines as they run on alternative fuels. The innovation of leapfrog supercritical CO2 technology that utilizes the same fuel and generates energy with increased (16% - 19%) efficiency is expected to create new opportunities, thereby keeping the market prospects upbeat over the coming years. The impact of this technology is a game-changer since it reduces heat input for more power output and also reduces the need for cooling technology on the condenser end. In addition, this technology produces output at a double efficiency compared to current technology with less amount of carbon emissions.

2. Mergers and acquisitions among market players can provide major business opportunities in the global microturbine systems market

Key players operating in the market are focused on mergers and acquisitions, in order to gain a competitive edge in the market. For instance, in October 2010, FlexEnergy Inc. acquired Ingersoll-Rand’s Energy Systems division.

Figure 2: Global Microturbine Systems Market Value (US$ Mn), 2017 - 2027

The global microturbine systems market was valued at US$ 440.8 Mn in 2019 and is forecast to reach a value of US$ 1,239.7 Mn by 2027 at a CAGR of 13.8% between 2020 and 2027.

Market Trends

1. Combined heat & power application

Microturbines are typically used in combined heat & power applications. Standby power application is expected to hold a dominant position in commercial use in the near future. This is to avoid losses occurring due to conventional power failure. Microturbines are mainly used in hybrid passenger vehicles. Growing environmental concerns combined with rising global warming and pollution levels are expected to boost the demand for combined heat & power.

2. Massive demand from oil & natural gas sector

There is a massive demand for microturbine systems from oil & natural gas followed by construction, pharmaceutical, wastewater treatment, and mining. The demand for microturbine systems in construction and oil & gas is expected to increase in the near future, owing to rising construction and offshore exploration activities.

Global Microturbine Systems Market - Impact of Coronavirus (Covid-19) Pandemic

Due to Covid-19 pandemic, several industries witnessed significant shift in their business. Microturbines are energy generation technology that is used for energy generation applications. Increasing demand for clean energy is driving the growth of microturbine markets. However, spread of coronavirus disease have a moderate impact on global microturbine systems market. The power supply industry going through hard phase due to the large collected dues that need to be paid to generators, uncertain revenue due to halting of residential and commercial operation and liquidity issues due to restricted cash flow and also having overall low power demand in the sector. Most of the countries have implemented lockdown, due to which there is ban on travel and businesses being shut down that cause obstacles in revenue generation. Further, disruption in supply chain and trade restriction have impacted overall production of the microturbine. Thus, in turn, decreases the demand for microturbine systems market in the future.

Value Chain Analysis

The value chain for microturbine systems covers all the stages of setting up these systems and its applications. A microturbine system comprises air bearings, generator, compressor, recuperator, fuel injector, combustion chamber, generator cooling fins, and turbine and exhaust outlet. All these sub-products are manufactured from procured raw materials such as steel, iron, oil and aluminum. The EPA (Environmental Protection Agency) continuously supervises the basic raw materials utilized in microturbine systems production. All the procured sub-products are assembled to form a complete entity. The products are designed and optimized according to requirement. High degree of vertical integration exists between product assemblers and original equipment manufacturers for instance Capstone remanufactures and sells sub components of microturbine systems for both replacement as well as new market.

Competitive Section

Major companies operating in the global microturbine systems market are Capstone Turbine Corporation, NewEnCo Ltd., Elliot Company Inc., Micro Turbine Technology BV, FlexEnergy Inc., Ingersoll-Rand Company, and Global Microturbine LLC.

Key Developments

For instance, in May 2020, Capstone Turbine Corporation received an order to help modernize a water pollution facility in upstate New York