Alstom Power saw its share price fall after revealing in a market statement that it “has experienced further technical difficulties in the introduction of new heavy duty gas turbine technology” – a situation all too familiar to other gas turbine vendors worldwide.
Alstom is currently in the process of introducing to service the first ‘B’ versions of its GT24/26 gas turbines, which include several modifications and upgrades relative to the earlier, ‘A’ rating, versions. In the past months, the company said, technical issues had arisen, as would be expected in commissioning high tech products of this type and for which modifications are being implemented. However, “recent inspections have revealed a further localised deficiency, which will require component modification on all ‘B’ rating machines.” The problem is higher than expected temperatures in the area of the heat shields in the second stage of the low pressure turbine.
A fix has been designed and implemented on the fleet leaders, with early indications suggesting that the modifications are successful. Addressing the issue will involve additional costs, but Alstom does not believe that these will “affect significantly the operating margin target of 6 per cent for 2002/03 previously disclosed.” However, reassurances from Alstom did not seem to fully convince the financial analysts. Lehman Brothers issued a profits warning on the company of between two and 16 per cent, leaving such a large margin as a result of the lack of clarity on the financial implications of the problem and its associated corrective measures.
Alstom is of course not alone in facing technical difficulties in the introduction of new gas turbines. For example, Siemens recently trumpeted that fact that it had finally solved the remaining problems with its 3A series and GE’s machines have also had their share of difficulties. However, with the current demand for gas turbines exceeding all expectations, any potential problem or a delay in commercial operation is likely to have significant financial implications.
