Footnote to History

Just after the sale of the Power Generation Business Unit (PGBU) to Siemens in 1997-1998, the IPP market for gas turbine based cogeneration projects exploded. Unlike the first PURPA-driven wave of pent-up business in the mid-1980s, where new-unit gas turbine sales peaked at around 9-10GW the enormous bubble that started in 1997-1998 reached an annual sales level that exceeded 60GW.

The sales boom was triggered by a number of factors—some of which may have been fabricated by the IPP community itself, and the period represented an unheard of sellers' market for large gas turbines. Demand was such that the suppliers were rationing their shop space and demanding that customers sign "reservation agreements" and pay non-refundable deposits. Favorite domestic IPP customers were given preference, and some international opportunities were forgone for lack of units.

Needless to say, the Siemens investment of some $6 billion to acquire PGBU from CBS Corporation quickly paid off and, in spite of the bubble bursting shortly thereafter, is still providing good returns.