The recent growth in US natural gas production, growing power needs in emerging markets and strong momentum behind sustainability measures represent strong tailwinds for Pratt & Whitney’s Power Systems Division, but challenges remain.
The power systems division accounted for a relatively small share – roughly 5% – of Pratt & Whitney’s total $12.7 billion in 2011 sales. But at a recent press briefing in the company’s headquarters of Hartford, Connecticut, President Dave Hess told reporters the power system division has experienced five years of steady growth. The company expects revenue generated by the Power systems division to increase by about 23% year-on-year in 2012.
Pratt & Whitney is one of the world’s largest jet engine manufacturers. The company is divided into a commercial engine segment that supplies major airlines; a Canadian division that makes engines for business jets, helicopters, and regional propeller aircraft; and a military segment that manufactures engines for multiple armed services applications, like fighter jets, including the F-35 Joint Strike Fighter.
Given the company’s other high-profile businesses, the aero-derivative industrial turbine segment can sometimes be overlooked, but the growing trend toward natural gas use fits well with the company’s offerings, which include combined-cycle generation, mobile applications and compressor units for petroleum pipelines.
“Bigger and More Efficient”
The company’s latest generation of industrial gas turbines are “bigger and more efficient,” P&W Power Systems President Peter Christman recently told Breaking Energy. The turbines, which are marketed to utilities and power generators, are derivative of the PW4000 turbofan aircraft engines used on the Airbus A330 and Boeing 777.
“Bigger is usually better for utilities,” said Christman. The company’s largest offering is the FT4000 SWIFTPAC, which is designed for single cycle, combined cycle and cogeneration in 60 MW and 120 MW configurations.
The FT4000 is over 40% more efficient than its predecessors, which requires it to burn less fuel and generate fewer greenhouse gas emissions. The turbines also feature quick start capability allowing them to follow lead demand and provide “peaking” service. The power plants’ ability to rapidly start and stop makes them ideal back-ups for intermittent distributed sources like wind and solar.
Highly variable distributed power is difficult for utilities to manage and some are now requiring wind and solar operations to include a storage component to help smooth out the variable loads. Fluctuations in renewable generated power are commonly balanced with gas-fired generation.
P&W Power Systems sells between 30 and 40 units annually at a proprietary cost negotiated in confidence with buyers. According to an industry source, the ballpark cost for a new gas-fired plant is roughly $900/kw for combined cycle and about $600/kw for a single-cycle design. However, according to US Energy Information Administration representatives, costs are highly variable and dependent upon numerous factors like distance to transmission lines, greenfield or brownfield siting, the number of units, etc.
From “unrestricted notice to proceed,” a single-cycle plant can be constructed in 6 to 12 months and combined-cycle plants can take anywhere from 18 to 30 months to build. Permitting can take an additional 6 to 18 months, according to Christman.
A Mobile Growth Spirt
P&W also offer a mobile application with their MOBILEPAC Gas Turbine Packages that can be delivered anywhere in the world in less than 24 hours. The 25 MW machines fit on two trailers – one generates power and the other houses the controls – that can be loaded into Russian-made Antonov aircraft for rapid deployment, which can be useful during emergency situations. Several MOBILEPAC units were used in Japan after the devastating March 2011 earthquake and tsunami.
The mobile power plants have been used for peaking purposes outside of Moscow, 22 units were deployed to Algeria to generate electricity for rural communities and Norway has installed MOBILEPACs to backup hydropower during droughts. Interestingly, P&W has yet to sell a mobile unit in North America, Christman said.
Soaring unconventional natural gas production, fracking, gas exports and cratering US prices have made natural gas a prominent discussion topic in recent years, with much talk about continued production upside, but the current low price environment is stimulating demand and making business difficult for heavily gas-focused producers.
Greater natural gas consumption – for use in the transportation, power generation and manufacturing sectors – coupled with lower production as companies move drilling rigs to search for higher-value liquids, could result in upward price pressure in coming years. A return to higher gas prices could represent a challenge for P&W’s gas-fired turbine business in North America.
Tapping quickly-growing Asian markets could also prove challenging in the face of stiff competition from coal-fired power, which remains relatively cheap and abundant. Several industry forecasts and outlooks indicate fairly robust coal consumption over the long term, particularly in fast-growing economies where large portions of the population remain without electricity.
This story has been updated to reflect feedback from the EIA.