A recent report by the energy research arm of business
consultants Frost and Sullivan says power plant services are a
steadily growing market, and the fastest growing regions of China,
India and South East Asia will account for almost quarter of the
market by 2017.
[caption id="attachment_56616" align="alignright" width="240"
caption="Korea Electric Power Co. provides power services to others
and runs plants of its own"]
[/caption]
That's good news for investors looking for a steady winner among
their investments.
According to the company's "
World Power Plant Services Markets
" report, power plant services earned revenues of $27.40 billion in
2011. This is expected to reach $35.41 billion in 2017. The key
drivers of this growth in emerging markets are increasing
electricity demand along with industry privatization, which is
leading to the outsourcing of services.
The fastest-growing regions are China, India and the
Association of Southeast Asian Nations (ASEAN). Their combined
share will rise from 18.1% in 2010 to 23.4% in 2017.
"Global growth in electricity demand is a key driver behind the
growth of the power plant services market," Frost & Sullivan
Industry Director Harald Thaler said. "As electricity demand
rises, new generating capacities are added to the system, which in
turn, require servicing."
The services market is expected to grow 4.2% between 2010 and
2017, while world electricity demand growth will be 2.7% over that
same period. Major contributory factors are greater outsourcing,
and the increasing use of gas-fired technology, where reliance on
the equipment providers for servicing is high.
"Geographically, the balance of power in the power plant
services market will gradually shift towards the emerging
economies, as they progressively liberalise not only their power
but also their gas markets," said Thaler. "Such trends will allow
for a much greater penetration of modern gas-fired plants which
attract higher outsourced maintenance spend."
Investors looking for buys in the power services field should
look at companies like the Korea Electric Power Corporation (
KEP
,
quote
), which runs its own plants in Korea and provides operations and
maintenance services to other power plants throughout Asia.
Kepco has slipped in recent months due to government controls on
electricity prices, but it is investing almost
$2 billion on more profitable overseas projects
.
Forbes
considers the stock to be
oversold
, so it may be overdue a turnaround.
