Deloitte Maverick Phase I

Team : Sneaky executionaries Vaibhav Gupta Varun Gopal Ashima Tayal

Executive Summary
Objectives
Calculate the size of gas turbine market and prioritize geographies based on market attractiveness Influence of micro and macro trends on the gas turbine market Developing value proposition and Go To Market strategy

Approach
Calculation of market size of filters done for different geographies based on electricity production volumes using natural gas Prioritization of geographies done on the basis of usage, growth rate, and market share of natural gas turbines for power generation Identification of micro and macro trends which will affect the turbine sales in the future and their market attractiveness impact Value proposition for E10 cartridge synthetic filter in comparison to E9 and E12 Preparation of Go To Market strategy keeping in mind the customer type and value proposition for reach type

Approach to calculate Market size

1. 2. 3. 4. Power generation by natural gas in each region Forecasting 2013 data as 2010 data was available by CAGR Conversion from MWh to MW Current installation base of Cartridge synthetic filter and turbine installation by MW 5. Power loss using cartridge synthetic filter in given climate 6. No of cartridge required per MW 7. Market size = No of cartridge required* selling price Region
Europe Middle east Rest of Asia Africa North America Latin America Total

Production (MW)
154699 84889 121711 11332 123088 35419 531138

No of cartridge
293927.1804 499144.8767 354178.226 33316.97945 596977.9737 68004.82192 1845550.058

Market size($)
96995969.52 164717809.32 116878814.59 10994603.22 197002731.34 22441591.23 609031519.21

Market size distribution

latin america 4% north america 32% europe 16% middle east 27%

Source : worldbank.org Assumption : power loss in Mixed climate is 3%

africa 2%

rest of asia 19%

Attractive geographies (Production + Natural gas share)

Europe

Asia +middle east Africa

North America Latin America

Europe

Russian Federation United Kingdom Italy Spain

Middle east

Strong Semi strong Weak or nil

Iran, Islamic Rep. Saudi Arabia Egypt, Arab Rep. Turkey United Arab Emirates Rest of Asia

Japan Thailand India Korea, Rep.

Africa Algeria North america United states Latin America

Mexico

Marco trends
Convergence of electricity prices and natural gas

Impact
Supply and demand Energy prices Competition High elasticity

Detailed Explanation
Reliability and operational issues in one can exacerbate the effects on supply and demand in the other Extreme and volatile energy prices at times of natural gas Where gas supply is limited, competition increases between gas and electricity markets Where weather sensitive electricity , high elasticity in energy prices.

Market Attractive
Medium Medium Medium Medium

Other users
Environment regulation on emission Up gradation Switching Growing power need Increase in production Dependence Concern about nuclear energy Industrial sector reforms Switching Usage

Other consumers of gas may suffer due to volatile prices

More stringent emission regulation so more up gradation of old turbines As natural gas turbines causes less emission. Fast-growing power needs in emerging economies. Increasing dependence on natural gas in countries Concerns about nuclear energy in the wake of the Fukushima disaster As more industrial usage is increasing , power requirement is increasing

Low
High High High High High High

Micro trends
Global shale boom

Impact
Switching and cost Flexibility and efficienct Increase in cost and availability

Detailed Explanation
Making natural gas cheap and plentiful.Natural gas produce cheap electricity 6 cents per kilowatt-hour as compared to costly 7.5 cents for new coal-fired power plants. More turbines and higher usage of natural gas Some can quickly increase and decrease power output to meet spikes or lulls in electricity demand, while others are able to hum along steadily without using much natural gas but take hours to bring up to speed Transportation issues, heavy weight, complexity and the unavailability of specialty alloys

Market Attractive
High

Conventional natural gas turbines High lead time

High

Low

Value Proposition
Parameter
E10

E9

E12

Advantage of E10

Filter Replacement Rate (months)

24

24

12

Lower downtime for replacement and lower operating costs

Turbine Wash time (hrs/year)

120

90

180

50% less wash time compared to E12

Downtime for filter cleaning (hrs/year)

20

60

300

Every 1% decrease in downtime causes loss of 1.5-1.9 MW per hour per turbine and cost($90-114) Suitable for harsh operating conditions and marine, arid, humid and sub-tropical climates

Filter technology

Synthetic

Cellulose

Cellulose

Maximum Capacity

190 MW

180 MW

180 MW

Suitable for use in wide range of turbines

Self cleaning mechanism

Yes

No

No

Self cleaning mechanism will lower operating and maintenance costs and reduce fouling High efficiency in varied climate types with minimal maintenance and usable in excessive heat, high humidity, high pollution, etc.

Suitability for Arid/Humid/Marine climates

High

Low

Low

Go To Market Strategy
For Mature markets (Europe and North America)
Value proposition : Lower operating costs, Higher output and efficiency, Less downtime and maintenance, Rugged and Adaptable Strong existing brand name. Use this to promote E10 to existing customers Use existing channel of distributors, turbine operators, maintenance operators. Strong sales force to address value to clients Sales channel design of 2 or 3 level channel differentiated based on geographies to avoid channel conflict. Direct selling
More cost effective More control Better satisfaction

Supply to competitors to be limited in the initial years so as to build a strong brand name for E10 and later leverage it for higher prices Sales of E9 and E12 to be continued alongside to reach the whole customer base Competitive positioning : Low downtime , Self cleaning , value for money. Reduction in prices by 1% downtime ($90-$114 per turbine per hour)

Go To Market Strategy
For Emerging markets (Middle East, Asia and Africa)
Value proposition : Efficient in Arid/Humid climates, Lower operating costs, Higher output and efficiency, Less downtime and maintenance, Rugged and Adaptable Sell via competitors to cover the majority of market Sell through distributors to develop the brand name of E10 in the nascent market Direct selling where accessibility is high and distributors for remote or difficult to access regions. Breadth of channel should be more than length. Selective distribution strategy rather than intensive Pricing to be done competitively so as to gain market penetration Provide complete solutions including servicing, maintenance etc. through consultative selling This market has high future potential and growth rate Africa is growing tremendously so moving early can get many opportunities.

Calculation for calculating market size

Climate Power loss(%) 5 2 3 Power generation by natural gas(MWh) 1355159000 743624000 1066186000 MW(24*365) 154699 84889 121711 Power after loss(MW) 146964 83191 118059

europe middle east rest of asia africa north america latin america

Marine Arid mixed

arid
mixed humid

2
3 4

99271000
1078253000 310272000 4,65,27,65,000.00

11332
123088 35419 531138

11106
119396 34002

Assumption

mixed = 3%

Power after loss(MW) 146964 83191 118059 11106 119396 34002

Cartridge synthetic market share 0.2 0.6 0.3 0.3 0.5 0.2

Market 29392.71804 49914.48767 35417.8226 3331.697945 59697.79737 6800.482192 184555.0058 10 10 10 10 10 10 10

No. of cartigde 293927.1804 499144.8767 354178.226 33316.97945 596977.9737 68004.82192 1845550.058

Market size ($330) 96995969.52 164717809.32 116878814.59 10994603.22 197002731.34 22441591.23 609031519.21