APAC Urbanisation Fuels Global Steam and Gas Turbine Demand

Context

APAC's sustained urban expansion and industrialisation have become the principal demand engine for the global steam and gas turbine market, reshaping manufacturers' order books and capital allocation. According to a Yahoo Finance report published March 30, 2026, regional demand has accelerated materially over the past 24 months, with industry analysts citing a projected near-term increase in equipment requirements. Governments across China, India, Southeast Asia and parts of the Middle East are prioritising both baseload and flexible thermal capacity to underpin urban growth and to balance higher penetration of intermittent renewables. This article synthesises market metrics, procurement trends, and supply-side dynamics through the lens of institutional investors and energy infrastructure strategists.

APAC's influence is visible across multiple metrics: order volumes, aftermarket services, and long-term maintenance contracts, each of which carries different margin and cash-flow profiles for equipment makers. The region's utilities and independent power producers (IPPs) are diversifying their portfolios with combined-cycle gas turbines (CCGT) for flexible generation alongside high-efficiency steam turbines for large baseload plants. Policy timelines and permitting cycles in major markets have shortened in 2024–2026, contributing to compressed project-development lead times and fatter near-term revenue funnels for OEMs. For investors, the compositional shift toward replacement and upgrade cycles in mature APAC markets is as important as greenfield demand in emerging cities.

Data integrity and sourcing matter: the March 30, 2026 Yahoo Finance piece is one of several contemporaneous industry summaries; complementary datasets from S&P Global, Wood Mackenzie and national regulators (e.g., India's Central Electricity Authority) published between 2024 and 2026 corroborate that APAC now represents the single largest regional share of new turbine procurement. The following sections provide a deeper, quantified view of the drivers, the comparative metrics versus other regions, and the implications for manufacturers, EPC contractors, and service providers.

Data Deep Dive

Order flows and capacity additions have shown distinct patterns across APAC sub-regions through 2025 and early 2026. Industry reports referenced in the March 30, 2026 coverage estimate that APAC could account for approximately 45–50% of global steam and gas turbine capacity additions through 2030, with China and India together representing roughly 48% of those new-build megawatts. In 2025 specifically, publicly reported turbine orders for APAC utilities rose an estimated 12% year-over-year (YoY), compared with single-digit growth in Europe and a roughly flat trend in North America, driven by both greenfield projects and life-extension retrofits.

Unit economics are shifting: average contract values for combined-cycle units reported in 2025 increased by an estimated 8% YoY as suppliers priced in higher raw-material, logistics, and localisation costs in APAC markets. At the same time, aftermarket service revenue — long a higher-margin component for turbine OEMs — expanded, with service backlog growth estimated at 15% YoY for APAC-dedicated teams in 2025, per vendor financial disclosures in late 2025. These service contracts, often 10–20 years in duration, increase visibility into long-term cash flows and are a critical component of valuation models for public equipment manufacturers and listed service providers.

Comparisons matter: APAC’s procurement pace contrasts with Europe, where decarbonisation policy has driven a measured decline in new thermal orders (down roughly 20% YoY in 2024–25 for traditional steam units), and with North America where gas-fired capacity has been more incremental and influenced by shale gas price cycles. Versus peers in industrial capital goods sectors, turbine OEMs are benefiting from the mix shift toward larger, higher-efficiency machines that command relatively higher initial capital expenditure but also generate stronger lifecycle service revenue. Sources: Yahoo Finance (Mar 30, 2026), vendor financial reports (2025), and industry consultancies (2024–2026 estimates).

Sector Implications

For OEMs and tier-one suppliers, APAC demand translates into both opportunity and execution risk. The opportunity is tangible in order backlog growth: several major OEMs reported APAC backlog increases in 2025 — mid to high single digits sequentially — which supported a rebound in margins in their 2025 full-year results. However, local content requirements and the rise of regional players are compressing gross margins on new-build contracts relative to the historic mix where Western-made OEMs captured a larger share of system and service revenues. Consequently, capital plans are being rebalanced: more investment in local manufacturing, joint ventures, and localisation of spare-parts supply chains.

For utilities and IPPs, the choice between high-efficiency steam plants, combined-cycle gas installations, and reciprocating engines is increasingly dictated by policy, fuel-price expectation, and grid-ancillary service needs. In fast-growing APAC cities, grid planners prioritise reliability and ramping capability, which has favoured flexible CCGT and faster-start gas turbines. In contrast, large industrial users (steel, chemicals) continue to rely on high-horsepower steam turbines for cogeneration, sustaining a differentiated demand pool within the same regional market. These divergent procurement profiles mean that companies offering a diversified portfolio of turbine technologies, long-term service agreements, and retrofit capabilities are positioned differently than narrow-product specialists.

Capital expenditure trends in related segments — casting, forging, and high-precision machining — have also shifted. Equipment lead times extended in 2024–25 to 12–24 months for particular components, increasing working-capital requirements for OEMs and subcontractors. That dynamic has sparked contract adjustments, including escalators and penalty clauses, which have ripple effects for project economics and financing structures. For institutional investors, these contracting and supply-chain details influence both revenue predictability and counterparty credit assessments for project sponsors.

Risk Assessment

Several identifiable risks could moderate APAC-driven growth or re-rate expected profitability for suppliers. First, fuel-price volatility, particularly in gas markets, can quickly alter the economics of CCGT projects; a 20–30% move in gas prices can change dispatch regimes and, in some cases, delay new-build decisions. Second, policy risk remains salient: aggressive renewables targets or new emissions standards enacted by national governments could accelerate premature retirement of thermal plant assets, reducing future aftermarket opportunities. Third, geopolitical tensions and trade policy changes — e.g., tariffs or export controls on critical turbine components — could disrupt the localisation strategies currently underway.

Credit and counterparty concentration is another material risk for equipment manufacturers and service providers. A small number of large utilities and state-owned power companies account for a large share of APAC procurement; delayed payments or project cancellations by a few key buyers could create outsized impacts on vendors with concentrated exposure. Similarly, financing risk at the project level can manifest when interest rates move: rising borrowing costs since 2022 have already lengthened the time to financial close for some IPPs, and a further 100 basis-point move in regional lending spreads could materially increase project-level LCOE calculations.

Operational risk — including turbine availability, forced outage rates, and technology-integration failures — remains central to value capture in this sector. Historical data show that aftermarket service revenues are highly correlated with fleet availability; a higher-than-expected forced outage ratio can depress spare-parts sales and service contract renewals. Active monitoring of OEM guarantees, warranty claims, and early-life performance of new engine types will be essential for investors monitoring issuer credit and equity risk.

Fazen Capital Perspective

Fazen Capital views APAC-driven turbine demand as structurally supportive of the sector but not a uniform tailwind across all public and private players. Our proprietary revenue-at-risk mapping suggests that companies with diversified service footprints, vertical spare-parts capabilities, and established local partnerships in China and India stand to capture a disproportionate share of the growth. Conversely, suppliers overly reliant on new-build contracts with thin localisation strategies face margin compression and longer receivable cycles. We have observed that service-led business models have delivered higher free cash flow conversion in 2024–2025, driven by recurring revenue and lower capital intensity.

A contrarian inference worth noting: while many market participants price APAC demand as an unalloyed boon for OEMs, the transition to regional manufacturing hubs increases competition and lowers entry barriers for non-traditional players, including large industrial conglomerates and equipment-as-a-service providers. This potential influx of lower-cost competitors could cap long-term margin upside, even as nominal market size grows. For institutional clients, this dynamic argues for more selective exposure to names with strong service moats, proprietary IP, and conservative balance-sheet profiles rather than broad sector plays.

From a portfolio construction perspective, the combination of revenue visibility from long-term service agreements and exposure to growth in APAC suggests a strategic tilt toward high-quality service providers and engineering firms with proven localisation execution. Such a tilt should be balanced with hedges against fuel-price and policy shocks, for example via shorter-duration instrument exposure or active credit monitoring on project sponsors.

Outlook

Near term (12–24 months), APAC demand for steam and gas turbines is likely to remain elevated as urban projects proceed to execution and utilities seek flexible capacity to stabilise grids with rising renewable penetration. Market consensus from industry analysts in early 2026 points to an estimated ~17% increase in cumulative demand for steam and gas turbines across APAC markets by 2030 relative to a 2023 baseline, though timing and regional composition will vary by country. Manufacturers that can shorten lead times, expand local content, and lock in long-term service contracts will likely convert backlog into cash more efficiently.

Medium term (3–5 years), structural trends — urbanisation, industrial electrification, and the need for grid stability — support robust capital spending in thermal and combined-cycle technologies in parts of APAC. However, decarbonisation pathways and the pace of renewables integration will create winners and losers: suppliers who can retrofit existing fleets, provide hydrogen-ready solutions, or offer hybrid thermal-plus-storage packages should be better insulated from downside scenarios. Investors will need to triangulate vendor order books, service-backlog composition, and host-country policy roadmaps to form high-conviction views.

Longer term, beyond 2030, the interplay between policy ambition, technological advancements (e.g., hydrogen combustion turbines), and the economics of large-scale storage will determine whether steam and gas turbine markets stabilise at a new plateau or enter structural decline. For now, APAC's urbanisation and industrial growth trajectories support a multi-year narrative of elevated demand that justifies close monitoring and selective exposure rather than broad thematic overweights.

Bottom Line

APAC urbanisation is driving a measurable re-rating of demand dynamics in the global steam and gas turbine market; the near-term opportunity is substantial, but investors must account for localisation, policy and fuel-price risks when assessing winners. Long-duration service contracts and demonstrable local execution capability are the primary differentiators for sustained value capture.

Disclaimer: This article is for informational purposes only and does not constitute investment advice.