Market participants are also feeling optimistic due to the expansion of the global oil and gas industry and the need for more flexible generating assets. The latter point is due to greater renewable energy generation.

But do not right off steam turbines yet. The global steam turbine market is enjoying a demand surge due to the large coal-fired capacity additions emerging markets such as China and India.

Also, the increase in the number of combined cycle gas turbines, the expansion of nuclear power and the upgrading of coal plants with supercritical and ultra-supercritical technology have all opened the market for steam turbines.

Analysis from Frost & Sullivan finds that the market earned $32.5 billion in revenue in 2013 and estimates this will reach $43.5 billion in 2020.

“Although the current profitability of gas-fired generation is low in regions such as Europe, gas turbines will be the technology of choice for future capacity additions,” Frost & Sullivan industry director Harald Thaler said.

“Gas turbines will also benefit from increasingly stringent emissions legislation and roll out of emissions trading schemes in emerging markets, as they curtail the growth of steam turbines.”

The rapid expansion of renewable energy has created uncertainties regarding the future of carbon markets.

That, in turn, has affected the outlook for conventional generation.

In this scenario, gas turbine manufacturers are focusing on the small and medium-sized gas turbine output ranges to leverage the high demand for flexible generating units.

Likewise, small and medium-sized steam turbine output ranges are forecast to outstrip the larger ranges due to a higher number of industrial applications, especially in the expanding oil and gas industry.

Smaller units are also expected to have better financing prospects.

“The steam turbine market is expected to experience significant consideration over the decade because of the presence of a large number of manufacturers and the growing internationalisation of Chinese OEMs [original equipment manufacturers],” Thaler said.

“Comparatively, the gas turbine market will see limited acquisition activity beyond the recent Siemens-Alstom merger.”

China is expected to become the leading gas turbine region as the position of the Middle East, hitherto the undisputed leader, declines gradually.

As part of its steps to clean up its air pollution, China is aggressively promoting gas turbines to take over from coal-fired generation.

With regards to steam turbines, while China’s share of this market is forecast to decline over time – albeit remaining in a dominant position – India’s share will expand once it resolves its coal issues.

Southeast Asia will also grow strongly as it looks to coal to reduce gas dependence.

The European market, on the other hand, is expected to remain weak amid uncertainty over future power demand growth and financially troubled utilities.