Shifting opportunities in the global MRO market

The international market for power plant MRO (maintenance, repair and overhaul) is evolving fast, in response to global shifts in economic power and the development of national energy policies aimed at safeguarding the environment or enhancing energy security.

Peter Weissenfels, Tyco Valves & Controls, Germany

The abbreviation MRO can cover multiple support services. From preventive, predictive and corrective measures, to asset management software, shutdown management, reverse engineering and damage analysis, keeping a plant up-and-running requires specialists in a multitude of techniques. In challenging applications, for instance, Tyco’s MRO services can also cover development, testing and manufacture of bespoke or custom-made new valves to meet the most exacting requirements.

But across an international market that differs wildly from territory to territory ” in line with local regulations and preferences, the maturity of the market, and the services available ” the No.1 priority for MRO remains safety. Even where cost may play a role in other decisions, the primary deciding factor in selecting maintenance and repair suppliers remains experience and reputation rather than cost, both for equipment and servicing.

If Europe’s economic difficulties continue, they could open up a greater share for lower cost suppliers. Yet even in Greece, Italy and Spain ” where the situation is worst ” cost-analysis decisions have mainly affected OEMs, although service suppliers must prove their value in these markets to stay afloat.

The service industry remains stable in the face of such economic challenges for one key reason: saving money now can cost money later. Condition monitoring, in-line repairs and servicing documentation can all help prevent costly breakdowns with long periods of downtime ” as well as potentially dangerous operating conditions.

A New Landscape for Germany

Certain territories have withstood the Eurozone’s challenges more effectively. The MRO market in Central Europe ” including the Netherlands, Belgium, Austria and Switzerland ” remains stable. Shutdowns and servicing are well established, with legislation enforcing regular maintenance, especially in the nuclear industry.

In Germany, however, the MRO landscape has changed considerably. With all its nuclear plants now scheduled for shutdown over the next decade, some analysts see a risk of energy shortages during periods of high demand.

Fossil fuels are expected to supply a diminishing fraction of global power Source: Tyco

Eight plants, representing 8 GW ” or 8 per cent of Germany’s energy generation1 ” were shut immediately after the Fukushima incident. Prior to these closures, about 17 per cent of its energy was provided by nuclear power, a gap that will need to be filled.

Moving to renewables quicker than anticipated calls for expertise in design, engineering and maintenance. Shutdown times will need to be minimised as there is unlikely to be a reasonable energy surplus for some time. In 2011, renewable energy accounted for about 20 per cent of Germany’s energy production2. This figure will need to increase to account for the loss in nuclear. In the meantime, Germany will switch from being an energy exporter to an energy importer, looking to nuclear power from neighbours such as the Czech Republic and France.

The nuclear sector now places greater focus on regular maintenance Source: Tyco

This rapidly changing energy landscape brings a paradigm shift for MRO suppliers. Germany’s feed-in tariffs and aggressive renewable energy targets ” 35 per cent of energy generated by 20203 ” means the solar photovoltaic market, onshore and offshore wind, biomass and geothermal power are all likely to grow.

MRO suppliers will have to adjust their offering to meet these market demands and ensure reliable plants in the future. Significant policy changes over recent months have led many operators to schedule only small-scale shutdowns as they wait and watch until the industry settles down. For the short term, though, the MRO market will be largely unchanged ” although Germany’s nuclear plants are closed or closing, they still require regular maintenance throughout the decommissioning period.

Power in the UK

A recent report suggested that up to 90 per cent of the UK’s energy needs could be met with renewable sources by 20304. By summer 2011, the UK had the world’s eighth-largest capacity in wind energy, of 5.7 GW5. But conventional power sources remain strong, despite investment in wind energy and research into tidal stations around Britain. Consumers in the UK are wary of nuclear power, and the planning process required in setting up new plants reflects this. In general, the UK’s power market represents potential for growth in conventional power.

The market in emerging economies

Outside the European Union, the power industry is growing fiercely to meet the needs of developing economies, such as those of the BRIC territories: Brazil, Russia, India and China. In Russia and Korea, the nuclear industry has potential for growth, and Tyco is watching these markets with interest. With new power plants in different stages of development in Russia, Ukraine, China, Korea, Czech Republic and France, the service industry looks set to expand.

In emerging territories, cost plays a larger role. Currently, many plants carry out their own servicing and repair. Outsourcing MRO is less common, as the influence of the stringent standards evident in the European and North American industries slowly grows in emerging markets. For example, plants in Asia are increasingly looking for higher levels of training and experience from their engineers. China still builds, on average, one conventional coal fired station each week, providing great market potential for MRO suppliers, ensuring that the speed with which the industry is growing does not mean quality or safety-compromised plants.

Case study: Electrabel Doel power station, Belgium

Tyco Valves & Controls completed a €1.5 million ($2 million) service contract in November 2011, encompassing a major shutdown service package at Electrabel’s Doel nuclear power station, near Antwerp in Belgium. SABO and Sempell ” two of Tyco’s specialist service brands ” together completed shutdowns at all four Doel sites, including the 1000 MW Doel 3 and 4.

SABO and Sempell collaborated to provide streamlined, efficient and consistent service with a single point of contact, and to ensure an optimal number of engineers were available on site at all times. This approach minimised downtime and allowed the plants to restart as quickly as possible. The four Doel sites provide around 30 per cent of Belgium’s energy demand, so efficiency of service was a key requirement. The length of shutdown for each plant was about two-to-three weeks, with up to 40 highly qualified service technicians working on the project around the clock, managing the shutdowns from start to finish.

As with all nuclear projects, MRO services require thorough documentation to enforce strict guidelines. This documentation was provided as part of the service package. The sites were visited six weeks before commencing the shutdown to scope the project and create an inventory of spare parts needed before work began.

This collaboration between SABO and Sempell is an example of how a company such as Tyco can deliver a comprehensive service package using its expertise in service and the power industry. Shutdowns at the Doel plant are large-scale projects and require efficient service to keep downtime to a minimum. A smooth, efficient shutdown was a key priority for the on-site engineers.

SABO is a leader in maintenance services for power, oil & gas and petrochemical environments and has been a preferred supplier for Electrabel for more than 15 years. This is the first time that SABO and Sempell have collaborated, combining expertise gained from decades of experience operating in the power sector. Both brands met Electrabel’s requirements for international certification, including EMAS (Environmental Management and Audit Scheme) and ISO 14001.

The Electrabel contract is likely to reach €2 million this year, with major shutdowns required every two years and more minor shutdowns annually. The final site, Doel 1, was shutdown in November, and required 32 service technicians on site 24 hours a day.

A New Focus on Nuclear Maintenance

The recently increased scrutiny on regular maintenance operations has not troubled experienced MRO suppliers that already exceed standard industry regulations and guidelines. In the nuclear industry, plants undergo exhaustive maintenance and shutdowns every two years to maintain the necessary high standards of safety when working with nuclear fuel.

Recent questions over the future of nuclear, for instance, have not affected Tyco’s commitment to the industry or its investment in innovation and quality programmes. With 50 years of experience in the nuclear sector, the power generation industry is a critical segment of the Tyco Flow Control business. Through commitment to all areas of the power industry, including manufacturing and production as well as maintenance, repair and service support, Tyco aims to meet the needs of a changing and evolving industry.

Is the future renewable?

The solar market in South Europe ” in particular, in Portugal and Spain ” continues to grow. As solar technology develops, power stations are seeing higher temperatures and pressures requiring more demanding valves. Molten salt stations require high temperatures and pressures, and can be corrosive on valves and pipelines. Concentrated solar power (CSP) plants can reach temperatures exceeding 500 à‚°C when sunlight is reflected effectively off the giant surrounding mirrors.

Storage of solar power has long been one of the challenges in making it a viable energy source. In Spain, a landmark in CSP technology was achieved in 2011, with a plant that keeps generating electricity even after dark. The cooling of the molten salt overnight generates power in a steam form, and can keep providing power for up to 15 hours after the sun sets.

Breakthroughs such as this demonstrate the achievements that can be reached and point to a viable future with renewable energy sources. With its heavy investment and testing in solar power, Spain is currently the only country on target to meet Europe’s 20 per cent desired cut in CO2 emissions by 2020.

MRO is yet to become established in the fledging renewables sector. Power plants are so new that accepted guidelines on how often maintenance is required are still to be determined. But, as technology develops and renewable power becomes more efficient, it is likely that renewables will gradually become more of a focus for the MRO industry. Regular summits now share knowledge, best practice and technological advances within the industry as businesses and suppliers at all stages of the chain collaborate and progress together. Europe’s carbon dioxide (CO2) targets can only be met through exploring new technologies; and feed-in tariffs continue to stimulate interest and investment.

For the foreseeable future, renewable energy sources are unlikely to overtake nuclear and conventional power plants as Europe’s primary source of energy generation. But events move quickly. In line with demanding CO2 targets, stimulus packages and feed-in tariffs, more than €150 billion was invested in renewable energy projects in 20106. Ongoing support in maintenance and repair services will ensure efficiency in power generation, and that investments in new technologies deliver results in the long term.


1. Financial Times, Berlin bets big on renewable energy, 8 June 2011

2. CEPEX seminar, The future of nuclear power in a post-Fukushima world, 19 October 2011

3. Bundesministerium fàƒ¼r Umwelt, Naturschutz und Reaktorsicherheit Gesetz zur Neuregelung des Rechtsrahmens fàƒ¼r die Fàƒ¶rderung der Stromerzeugung aus erneuerbaren Energien, August 2011

4. WWF, Positive Energy: how renewable energy can transform the UK by 2030, 25 October 2011

5. World Wind Energy Association (WWEA) Half-year Report 2011, July 2011

6. Bloomberg New Energy Finance Global Trends In Renewable Energy Investment, 2011

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