Annual Report 2023

Group Management Report

Trends in the markets for Power Engineering

For 2024, we generally expect the market environment in the Power Engineering Business Area to remain challenging. The current geopolitical situation and the development of energy and commodity prices will continue to generate uncertainty in virtually all markets.

The market volume in merchant shipping in 2024 is expected to remain at a stable level compared with the reporting year. Rising demand for new bulk carriers and tankers is anticipated, while demand for container ships and LNG tankers is expected to be at a lower level. The areas outside merchant shipping are likely to reach a higher level than in 2023. We expect to see an improvement in the cruise ship business due to the renewed rise in demand for travel activities. The passenger ferry market is also expected to grow. We continue to anticipate a stable high level of demand for government vessels. In the offshore sector, further new order volumes for special applications are expected, such as for special offshore ships for wind turbines. Overall, we predict that the marine market will reach a similar level to that seen in the 2023 reporting year, with sustained competitive and price pressure. The general focus will continue to be on building new highly efficient ships that meet future emissions targets.

The market for power generation will remain in upheaval in 2024. Uncertainty in relation to sustainable and future-proof power generation will be prevalent, particularly in countries that have established clear climate-neutrality targets. In these countries, the framework conditions required to expand the infrastructure for carbon-neutral fuels are often not yet fully developed. This remains a reason for cautious investment behavior. In the core business, we see a need for decentralized, hydrogen-ready power plants, primarily in Europe. Outside Europe, demand for ammonia-capable engines will increase. With an increasing proportion of renewable energy in the distribution networks, a further rise in demand for balancing facilities is expected around the world. These are used to meet power requirements if darkness and lack of wind mean that the share of renewables is not sufficient to ensure security of supply. A positive trend in demand for large electrolyzers as well as for power-to-methane and power-to-methanol plants continues to be expected. We see a very dynamic global competitive environment in these areas with new providers and international partnerships. Alongside the risks posed by a continued lack of price stability in the markets and by bottlenecks in supply chains, we expect strong competition and price pressure – both in the core business and for power-to-X solutions.

In turbomachinery, we expect sustained demand in 2024 for new applications relating to the energy transition and climate protection. Our traditional business will decline somewhat from a high level, primarily in oil and gas production. We nevertheless expect that the production plants will continue to be well utilized, assuming the level of competition seen to date is sustained.

Both in the after-sales market for engines in the marine and power plant business and in the after-sales market for turbomachinery, we anticipate continued robust demand in 2024 albeit below the level of the reporting year, with the fraught geopolitical situation generating uncertainty.

For the period 2025 to 2028, we expect to see growing demand in the power engineering markets. However, the extent and timing of this growth will vary in the individual business fields. It also remains to be seen how long the markets will be adversely affected by the major influential factors of global conflicts and energy sector trends.

Liquefied Natural Gas (LNG)
LNG is needed so that natural gas engines can be used in long-distance trucks and buses, since this is the only way of achieving the required energy density.
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