WTUI ‘steady as she goes’ through a ‘boom and bust’ gas-turbine market
March 2010 for Combined Cycle Journal
The mission of the Western Turbine Users always has been to conduct a user-controlled forum for owners of General Electric Co LM-series gas turbines. GE’s TF39 aircraft engine was adapted for non-flight duty in the 1960s and named the LM2500. Recall that “LM” stands for “land and marine.”
During the 1970s, GE sold its LM2500 “gas generators” to compressor manufacturers such as Dresser, Ingersoll-Rand, and Cooper Bessemer. These companies designed and built their own power turbines to match the speeds of their pipeline and process compressors. They then sold the complete turbine/compressor “package” to the customer. Selling gas generators to compressor packagers was a good niche business for GE.
GE’s Aircraft Engine Div wanted to grow the LM business by offering aeroderivative power generation units—like Pratt & Whitney’s FT4. But GE already had a Power Systems Div (Schenectady, NY) that sold heavy-duty frame gas turbines for power generation. Power Systems executives worried that a separate sales force selling LM engines would confuse the customer with competing GE products.
In 1978, Jack Welch, then a senior VP, settled the internal battle, deciding that the aircraft group could license a family of “package” builders to sell LM2500 generator sets. Companies such as Stewart & Stevenson, Ruston Gas Turbines, and IHI were signed up by GE as qualified packagers of gensets.
Welch also said that the Power Systems Div could build and sell LM gensets to customers who preferred to contract directly with GE. So Dick Cull and Brian Rowe of GE established the business framework and found visionaries like Joe and Carsey Manning and Paul Barron to pump up the entrepreneurial energy of their young sales teams.
Cogen boom. Thanks to some favorable laws and tax benefits, the US cogeneration market became red hot during the 1980s. Installing a gas turbine with an HRSG was a concept easy to understand. Natural gas was cheap and the cogen plants were profitable.
Competition among gas-turbine manufacturers was fierce, but GE won the lion’s share of the battles with ABB, Westinghouse, Rolls-Royce, and Pratt & Whitney. The toughest sales battles often were fought between the GE packagers of LM2500 and LM5000 gensets in competition with GE Power Systems, which was offering 6B and 7E frames. Some GE executives saw this as problematic, but Welch knew that the competition would ultimately strengthen both divisions, give customers more choice, and put two GE horses in every race. Sales of GE aeroderivative gas turbines grew rapidly.
Technically, customers liked the superior fuel efficiency of LM turbines and the availability of spare engines to minimize downtime needed for maintenance. Commercially, customers often preferred some of the business practices of GE’s packagers, which were more willing to customize a design at a customer’s request.
Plus, at least one packager, Stewart & Stevenson, tested each complete generator set at full power before shipment—a major value point for many customers. Most importantly, many customers liked the packagers because they were more flexible in negotiation of contract terms and conditions. Stewart & Stevenson took great pride in making its turbine operation feel like a small family business. As aeros came into the mainstream of power generation, the gas-turbine business became much more competitive in the range of 20 to 50 MW.
In the 1990s, the GE heavy-duty frame business moved its focus to the largest GT models—such as the 7F and 9F. Introduction of the LM6000 and the SprintTM power-boost option created a 50-MW peaking unit that was a perfect size for municipal utili- ties and cooperatives.
Even the larger investor-owned utilities found application for these quick-start units. In 1998, the US gas turbine market saw a surge of orders unlike any before. That was followed by a market crash of equal magnitude (Figs 1, 2).
Today, the US gas-turbine market for power generation is concentrated in these two size ranges (Fig 3):
- 10 to 65 MW, satisfied mostly by aeroderivatives.
- 150 to 300 MW, all heavy-duty frames.
While overall GT sales in megawatts are dominated by frame units (more than 85% market share), aeros win a nominal 60% share in the range of 18 to 65 MW (Figs 4, 5).
Since the LM6000 was introduced in 1990, it has become the most popular aeroderivative engine in its size class; more than 800 units are now operating (Fig 6). The overwhelming majority of LM6000s are in electric generation service.
By contrast, more than half of the LM2500s sold today are for compressordrive applications (Fig 7). As the chart shows, the LM2500 series of engines continues to attract a sig- nificant number of orders almost 40 years after the model’s introduction.
The LM5000, which GE introduced in the early 1980s, lost favor among customers when the LM6000 was introduced. It is no longer manufactured by GE and only about 60 units remain in service worldwide.
Without a doubt, the Western Turbine Users’ forum has had a profound positive impact on the gas-turbine industry. What started out as a casual meeting of plant managers in California has evolved into the most important annual meeting for LM users worldwide. The LM fleet is well represented on every continent except Antarctica (Fig 8).
Operators, vendors, and developers fly in for this meeting each year to get first-hand information on new technical developments and to share stories and lessons learned with the family of authorized Repair Depots and the GE team. No one ever could have predicted at the first meetings of the Western Turbine Users that the group would evolve into such a huge gathering of equipment and business professionals.