Aging Facilities and New Builds will Drive Growth

The Energy and Power Systems (EPS) business unit within Frost & Sullivan constantly monitors global maintenance, repair, and overhaul (MRO) markets within the energy and power industry. This research service provides a concise analysis of the current state of the power plant maintenance, repair, and overhaul markets in South Africa, Nigeria, and Zambia. The analysis covers key trends within each country through an overview of market drivers and restraints, key legislative trends, and provides a competitive analysis for these three key African MRO markets.

Introduction

• The electricity generating sector is capital intensive, not only for construction but also for operations where both unscheduled and scheduled high-value maintenance is periodically needed to keep power stations running.
• An analysis of the maintenance, repair, and overhaul (MRO) market is able to provide an outlook for the suppliers of MRO services, as well as provide an outlook of the electricity market in general.
• This research service analyses, highlights, and provides forecasts into the state of the MRO markets in South Africa, Nigeria, and Zambia.

The following areas are analysed in-depth for each of the countries in the study:
• The age of current generating capacity.
• Expected future generating capacity to be built.
• The state of operations of current installed capacity.
• Drivers and restraints of station maintenance in each country.
• Estimated market size and growth of the station maintenance sector.
• Legislative environment facing generation and maintenance companies.
• Future market outlook regarding power station maintenance.
• Joint country comparison.

Research Scope and Methodology

Research Scope
Power station maintenance, repair, and overhaul markets in 3 African countries: South Africa, Nigeria, and Zambia.
Analysis of utility-scale and grid-connected power station maintenance for various sized generating units for each country provided and an MRO sector view for each country.

Geographic Scope
Nigeria
Zambia
South Africa

Methodology
Secondary research into:
• The state of each country’s generating capacity and the market dynamics affecting the MRO sectors.
• Interviews with key participants in each MRO market were used to generate market intelligence.
Within each market, Frost & Sullivan consulted with:
• Energy industry regulators
• State-owned electricity utilities
• Independent power producers (IPPs)
• Large MRO suppliers
• Secondary MRO suppliers

CEO’s Perspective

1. Generation growth will drive the increased use of MRO in the surveyed countries.
2. The age of the installed capacity will result in more frequent MRO in the medium term.
3. Skills development of suitable engineers and artisans will be extremely important for industry participants.
4. Generating capacity in all countries is increasing as projects are commissioned.
5. The MRO industries are changing rapidly and all markets provide growth opportunities if the correct strategy is used.

Executive Summary

• Boilers are mainly used in industrial applications or in coal-fired power stations. The utility-scale boiler markets outside of South Africa are currently insignificant; however, as new coal-fired projects are planned, opportunities will open up.
• Nigeria has the highest estimated growth rate in terms of future MRO use. Growth is coming from a low base and will be powered by an expected post-privatisation boom.

Age of Capacity:
The generating capacity in South Africa and Zambia was largely built in the 1970s or early 1980s. Investment in the respective power sectors has not risen to an adequate level. As such, power stations in each country struggle with aging equipment. In Nigeria, power station construction has been constrained and, as such, % of the country’s capacity is less than X years old.

MRO Contracts:
Large contract competition drives the MRO market. In this area, the Xcountries differ in their contract management. Nigeria has historically operated without large contracts, South Africa has operated with a few large, centrally-managed maintenance contracts, and Zambia has only used temporary unscheduled contracts. All countries are moving towards more comprehensive maintenance contracts which will allow the generating assets to achieve improved performance. Zambia is an exception, as MRO is expected to continue to be managed in-house.

Market Outlook:
The MRO markets in each of the covered countries are set to grow. This is driven primarily by the need for a better performing electricity generating sector and secondly by an expanding generation capacity. In countries where maintenance spending has been low in the past X years, performance problems are necessitating its ramped up implementation. South Africa and Nigeria share this specific characteristic.

South Africa
• Generation capacity is expanding in line with the Integrated Resource Plan (IRP) 2010. By 2030, generation capacity is expected to double.
• Coal will remain the dominant feedstock with large increments in nuclear, gas, and renewables.
• All of South Africa’s generation capacity is available to generate electricity, except that which is either under scheduled or unscheduled maintenance.
• The system suffered from a maintenance backlog of Xunits as of November 2012.

Nigeria
• Generation capacity growth in Nigeria is driven by a historically inadequate supply. The absence of power has driven the widespread use of private generators.
• The current expansion drive and its resulting privatisation programs will lead to capacity expansion.
• Approximately X% of Nigeria's generating capacity is unavailable to generate electricity.
• The rest of the capacity is subject to sporadic operation with poor maintenance practices.

Zambia
• Zambia is almost entirely reliant on hydro-powered electricity. The expansion drive in Zambia is driven by the potential to export electricity to neighbouring countries as the internal demand is relatively small.
• Over % of Zambia’s electricity is generated in X hydropower stations. New generation growth is also concentrated in these X stations.
• All available capacity is operational, however it suffers from high unscheduled maintenance due to station age.

Key Questions This Study Will Answer

• How is the relevant country MRO market growing in the research timeframe up to 2017?
• Who are the existing competitors and what are their primary competencies?
• What are the future trends likely to be faced by market participants?
• What are the drivers and restraints faced by the market participants in each country?
• How do the MRO markets in the three countries surveyed compare to each other?

Table Of Contents

Table of Contents

1. Executive Summary
2. Industry Analysis of South Africa
3. Industry Analysis of Nigeria
4. Industry Analysis of Zambia
5. Conclusions
6. The Frost and Sullivan Story

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