Abstract
Strong Emphasis on Capacity Building Likely to Lead to Glut in Power Generation
Much publicized power shortages in China during the last few years attributed
to lack of approvals for new builds during the latter part of 1990s, and
forced the Chinese power sector planners to embark on a massive capacity
expansion drive in the last two years. While the gen-set industry benefited
immensely because of this power shortage, the narrowing gap between demand and
supply is likely decrease the demand for diesel fired gen-sets. Increasing
fuel oil prices would also add fuel to the fire.
This Frost & Sullivan research service analyzes the market demand for two
different technologies for gen-sets in China: compression ignition gen-sets
using diesel as fuel, and spark ignition gen-sets using natural gas as fuel.
Technology Focused End-users to Support Future Revenues
Current major end-users comprise of diverse industries such as banks, process
plants, hotels, chemical plants, telecom companies, power stations, etc. The
main reason for demand of gen-set is the sudden increase in shortage of grid
power across China during 2002 to 2004 period. It is anticipated that the
extensive power shortage problem in China will be resolved by 2007, because
the Chinese power generation capacity is expected to exceed 900 GW in 2007
based on the current projects being established and cumulative power
generation capacity. Hence, the market share of industrial end-users will be
reduced in future.
However commercial, municipal end-users and large industrial end-users, such
as banks, security companies, telecom companies and power stations, etc, will
continue to be the major end-users after 2007. Accordingly, the high
performance and nice brand products will be more popular among the end-users.
Diversifying Applications Push the Need for High-end Products
While blackouts during peak power shortages have impacted the industries and
commercial establishments for several years, the end-users were more focused
on addressing their base loads and standby needs with gen-sets, rather than
peak loads. However, with the government stepping in to create more base load
capacity on the grid, it is expected that the end-users will focus more on
high end gensets for peak load applications. This will also help the market to
garner a higher average price per kVA.
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