The HRSG Market, Sized Honestly

A heat recovery steam generator takes the exhaust from a gas turbine or an industrial process, usually somewhere between 900°F and 1,100°F (482°C to 593°C), and turns that waste heat into steam. The steam either feeds a steam turbine in a combined cycle plant or goes straight into a factory as process steam in a cogeneration setup. A business plan for this trade has to say which of those two customers you are chasing, because they buy differently, pay differently and tolerate different lead times.

The first thing a lender will notice when they search the market is that nobody agrees on its size. Published 2025 estimates run from USD 1.4 billion (IMARC Group) through USD 1.61 billion (Fortune Business Insights) and USD 2.20 billion (Future Market Insights) to USD 2.68 billion (SNS Insider, 2026) and even USD 3.44 billion (Market Research Intellect). Forward growth rates are just as scattered, from 3.63% a year to 2034 at the low end to 7.5% a year to 2035 at the high end.

Why the numbers disagree, and which one to use

The spread is mostly a scope argument. The narrower figures count only the boiler island itself, meaning the pressure parts, casing and stack. The wider ones fold in duct burners, SCR and CO catalyst systems, feedwater pumps, control packages and sometimes erection labour. Neither is wrong. For your plan, pick the definition that matches what you will actually sell, state it in a footnote, and then build your revenue from bottoms-up unit sales rather than from a slice of a top-down market. A lender who has seen a hundred plans that say “we will win 1% of a $2 billion market” reads that sentence as an absence of analysis.

Fortune Business Insights also reports that the combined cycle application holds the largest share, that horizontal-drum designs lead by type, and that utilities are the biggest end user. Those three facts shape a startup more than the headline dollar number does. Horizontal-drum, combined cycle units for utility-scale turbines are the territory of a handful of global OEMs. A new entrant does not win there. The openings are in the 1 MW to 40 MW gas turbine class, in cogeneration at food plants, refineries, chemical sites and hospitals, and in aftermarket work on the installed base.

The demand signal that matters: gas turbine backlogs

HRSG demand follows gas turbine orders by a year or two, and turbine orders are currently running hot. GE Vernova reported its gas turbine backlog at 116 GW at the end of the second quarter of 2026, up from 100 GW a quarter earlier, and said it expects backlog plus slot reservations to reach about 125 GW by year-end (Utility Dive). Wood Mackenzie put gas turbine manufacturing capacity utilisation at around 90% in 2025 (OilPrice.com). Large equipment items downstream of the turbine, generator step-up transformers among them, now carry lead times of more than 100 weeks at major suppliers.

The practical reading for an HRSG startup is that the large OEMs are full, the buyers of smaller turbines and cogeneration sets are being told to wait, and a credible mid-size fabricator with open shop capacity has a real argument to make on delivery. That argument disappears if you cannot show lenders where the plate, tube and header material will come from, so the plan has to cover raw material procurement as seriously as it covers sales.

The aftermarket is the quieter half of the market

Most of the installed base was built in the 1990s and 2000s combined cycle boom, and those units were designed for baseload. Plants now cycle daily or twice daily, which is hard on HRSGs. In published failure statistics, flow-accelerated corrosion accounts for more than 40% of HRSG tube failures (Tetra Engineering), and EPRI guidance, summarised in Power Engineering, recommends dropping oxygen scavengers from cycle chemistry programmes for units without copper alloys. Every damaged harp, failed tube bundle and thinned header is a repair, a retube or a module replacement. That work is scheduled around outages, is priced per job, and does not depend on a new gas plant getting a permit.

Questions Engineers and Buyers Ask First

These are the questions that come up again and again when a plant engineer, an EPC procurement lead or a bank credit officer first looks at an HRSG supplier. Your plan should answer each one in plain language, because the reader will have no one to ask.

How does an HRSG actually work?

Hot exhaust gas flows across a series of tube banks inside an insulated casing. The first bank the gas meets is the superheater, which raises the temperature of steam that has already been generated. Next comes the evaporator, where water in the tubes boils into steam and collects in a drum. Last, at the cool end, the economiser preheats incoming feedwater using whatever heat is left, which is why stack temperature is a direct measure of how well the unit recovers energy. The steam leaves at the pressure and temperature the turbine or process needs. Units with several pressure levels, commonly one to three, recover more heat but cost more.

What is the difference between an HRSG and a waste heat boiler?

An HRSG is a type of waste heat boiler built around a gas turbine or engine exhaust, usually unfired or supplementary-fired, with defined pressure levels and tight integration with the turbine controls. “Waste heat boiler” is the broader term and also covers units on furnaces, kilns, sulphur plants and process gas streams, where the gas is dirtier and the design is driven by fouling and corrosion rather than by turbine back-pressure. Plenty of businesses sell both. Your plan should say which you lead with, because the engineering skills and the code-stamp scope differ.

Horizontal or vertical?

Horizontal designs, where gas flows sideways and tubes hang vertically, dominate large combined cycle plants and are the largest segment by type. Vertical designs, with gas flowing upward and horizontal tubes, take up less ground and suit tight sites, and they are common in once-through and compact industrial applications. A small supplier tends to pick one and specialise, because the tube support, drainage and drum arrangements are different engineering problems.

How much does an HRSG cost?

There is no published price list, and anyone who quotes you a single dollar-per-kilowatt figure without a design basis is guessing. Price scales with steam flow, pressure, number of pressure levels, alloy content, whether duct burners and SCR are included, and site access. As a planning assumption, a packaged unfired unit for a 5 MW to 15 MW turbine runs from roughly $1.2 million to $3.5 million, while a large triple-pressure utility unit is priced in the tens of millions. Treat those as placeholders until you have three supplier quotes in hand, and say so in your plan.

Does an HRSG need a specific certification to build?

Yes. In the United States an HRSG pressure boundary is built under ASME Section I, which requires the manufacturer to hold an ASME S Certificate of Authorization, and repairs to existing units require a National Board R stamp. The details, with fees, are in the licensing section below.

What It Costs to Get Started

“HRSG business” covers three very different capital profiles, and the most common error in plans we see is blending them into one cost number. Pick the model first, then cost it.

Model one: engineering-led, fabrication subcontracted

You design, specify, quote, project manage and commission. Pressure parts are built by a code-stamped subcontract shop. This is the lightest path, typically $250,000 to $750,000 (£197K to £590K) to launch, because most of the spend is people, software, insurance and working capital. The catch is that you carry the warranty and the design liability on work you did not weld.

Model two: aftermarket and repair contractor

You retube, replace modules, repair headers and do high-energy piping work, mostly during outages. Launch cost is $400,000 to $1.4 million (£315K to £1.1M), driven by the National Board R stamp programme, welding procedure qualification, tooling and a seasonal working capital swing. Revenue is lumpy, peaking in spring and autumn outage seasons.

Model three: own fabrication shop

You build the whole unit under your own S stamp. A leased 40,000 sq ft shop with a 20-ton overhead crane, submerged-arc and GTAW stations, tube-to-header welding equipment, a hydrotest area and a heat-treatment arrangement costs roughly $3.5 million to $6 million (£2.8M to £4.7M) to stand up, before the first order is financed. These are Avvale planning ranges built from typical equipment and fit-out costs, not quoted prices, and your own supplier quotes should replace them.

Cost breakdown for a model one launch (US dollars)

• Engineering software and licences: $35,000–$90,000 a year for thermal design (for example Thermoflow's GT PRO and THERMOFLEX suites), pressure-part calculation, 3D plant design and CFD
• Quality system and code compliance: $20,000–$80,000 to write the QA manual, qualify procedures and prepare for survey, according to engineer-forum estimates of the work
• Professional liability and product liability insurance: $25,000–$70,000 a year, with limits sized to what EPC contracts demand
• Key hires, first 12 months: two thermal engineers, one mechanical or code engineer and one project manager, $380,000–$560,000 loaded
• Performance bond and warranty reserve capacity: bonding fees of 1% to 3% of contract value per job, plus a reserve of around 2% of revenue
• Marketing, trade shows and bid costs: $30,000–$80,000, since a single detailed bid package can consume 120 to 300 engineering hours
• Working capital, six months: $120,000–$350,000, because customers pay by milestone and retainage can sit for a year

Funding routes

In the US, SBA 7(a) loans reach up to $5 million with long terms for equipment and real estate, and are the most direct route for models two and three (the data is in the lending section below). For a model one launch, a bank line against purchase orders plus founder equity is more typical. In the UK, the government-backed Start Up Loans scheme lends between £500 and £25,000 to the founder personally, with a one to five year term and a year of mentoring, and the rate has reportedly been revised upward from 6% to 7.5% as of April 2026, so check the current figure at the time you apply. That is useful for seed design work, but it does not touch a fabrication shop. Heavier UK capital comes from asset finance and, for exporters, from UK Export Finance, which offers supplier credit and buyer credit guarantees to banks that might otherwise decline to lend. Further abroad, Canada's BDC, India's SIDBI and the IFC's SME programmes play similar roles.

Who You Compete With and Who You Can Partner With

The HRSG supplier base is concentrated at the top and thin in the middle. Your plan needs a named competitor map, not a paragraph about “established players”. Here is the real picture, and where a startup fits in it.

Where the gap is

The large OEMs are built around utility orders measured in hundreds of megawatts. They are not set up for a 6 MW cogeneration unit at a dairy plant, or for a rush retube on a ten-year-old unit with a forced outage in week three. The gap a startup can fill is speed, attention and willingness to quote small jobs, backed by documented code compliance. The risk is that a customer's procurement rules often require proof of prior HRSG deliveries, which a new company does not have. The plan should address that directly, for example by naming an experienced chief engineer who has delivered units elsewhere, or by lining up a referenceable first project with a friendly customer.

If your concept leans more towards general boilers, compare this page with our package boiler business plan template and the industrial boiler business plan template, and if the heat exchanger side is your focus see the heat exchanger business plan template.

Equipment and tooling a fabrication launch needs

• Overhead crane, 20 to 40 ton: $150,000–$400,000 installed, and the first thing to specify because it sets your maximum module weight
• Submerged-arc and GTAW welding stations: $180,000–$450,000 for a six to ten station shop, plus preheat and interpass control
• Tube bending and finned-tube forming or purchased fin tube: $90,000–$350,000 if made in-house, or buy finned tube from specialist suppliers
• Header drilling and tube-hole preparation: $120,000–$300,000 for a CNC or radial arrangement
• Hydrotest area with certified gauges: $40,000–$110,000, including drainage and safety barriers
• Radiography or phased array NDE, or a subcontract arrangement: $60,000–$250,000 in-house, otherwise a per-job cost
• Post-weld heat treatment, in-shop or by subcontract: a furnace is $250,000 or more, so most startups subcontract it

Pricing, Margin and a Worked 12 MW Unit

HRSG revenue arrives as project milestones, not monthly invoices. A typical contract pays 10% to 15% at order, 30% to 40% against engineering and material release, 30% to 40% against shipment, and the final 10% to 15% on commissioning and acceptance, often with retainage. The cash curve matters as much as the margin, and it is where first-time founders get hurt.

Worked example: a 12 MW gas turbine cogeneration HRSG

A food processor in the US Midwest orders a single-pressure supplementary-fired HRSG behind a 12 MW gas turbine, generating about 30,000 lb/hr of steam at 600 psig, with a duct burner and space for an SCR catalyst. Your fixed price is $2,600,000. These costs are an Avvale composite built from typical shop rates, and should be replaced by your own estimating data.

Now run it for a year. Six units of this type produce $15.6 million in revenue and $3.04 million in gross profit. A small shop-based business carries about $2.2 million a year in overhead: management, estimators, quality staff, rent, insurance, bonding, utilities and software. That leaves roughly $840,000 before tax, a net margin near 5.4%, which is the honest low end of the range in the hero stats. Move four of those units to a repeat customer and cut estimating cost per bid, and you approach the 10% to 12% end. This is exactly the kind of arithmetic a credit committee can verify in a few minutes, so it belongs in your plan in this form.

Aftermarket economics look different

Retube, module replacement and repair work is billed on time and materials or on unit-priced scopes, and gross margins of 28% to 38% are commonly modelled, because the customer is buying speed and a stamp rather than comparing three fabricators. A single harp replacement during a planned outage might be $450,000 to $1.2 million. The tradeoff is volatility: you may do five jobs in April and one in July, and your plan has to carry the cost of a skilled crew through the quiet months, or show how you will fill them with fabrication work or long-term service agreements.

The four levers that move profit

• Engineering hours per unit: a standardised design family for 5 MW to 15 MW turbines can cut engineering from 2,100 hours to under 1,200
• Material pass-through: alloy tube and plate prices swing, so contracts need escalation clauses or early material buys
• Shop hours per ton: welder productivity and rework rate separate a 19% job from a 9% one
• Service attachment: every unit you build is a ten-year aftermarket customer if you sign a spares and inspection agreement at handover

SBA Lending for Boiler and Heat Exchanger Makers

US HRSG manufacturers usually fall under NAICS 332410, Power Boiler and Heat Exchanger Manufacturing. Aggregated SBA lending data from PeerSense shows how lenders have treated this industry historically.

The geographic spread is useful for a regional plan: Pennsylvania has 8 loans totalling $5.9 million, Texas 7 loans at $6.1 million, New York 7 at $3.7 million, California 7 at $2.9 million and Oklahoma 6 at $6.7 million. Oklahoma's average loan size stands out and is consistent with its energy equipment and oilfield services economy.

Two points to take from this. First, the pool is small. Sixty-six loans over the lifetime of the dataset tells you lenders can finance this industry but do not do it often, so expect a longer underwriting conversation and questions that a restaurant loan would never prompt. Second, the average ticket is large, which fits real-estate-heavy and equipment-heavy loans for shop buildouts. An SBA lender will want a feasibility study of your order pipeline, equipment appraisals, key person insurance on the lead engineer and a clear picture of how contract receivables will behave. Our bespoke package writes the plan and the 5-year model in the structure lenders use, and you can explore it on the bespoke business plan page.

Code Stamps, Emissions Rules and Export Compliance

HRSGs are pressure equipment, and nobody buys one without evidence that the builder is authorised to make it. Your plan should treat certification as a funded work package with a date, a budget and an owner, rather than as a line in a licensing checklist.

United States

• ASME S Certificate of Authorization (Section I, Power Boilers): required to build HRSG pressure parts for steam above 15 psig, including superheaters, economisers and integral piping. Issued after a joint review by ASME and an authorised inspection agency, with a manufacturer's quality control system in place.
• National Board R Certificate of Authorization: required to repair or alter pressure-retaining items. The National Board lists the R certificate fee at $1,150 for a three-year period, plus a one-time $150 charge for the loan of the steel R symbol stamp. Practitioners report a survey cost near $15,000 and total implementation of $20,000 to $80,000, most of it spent on the quality manual, qualification of welding procedures and shop practices.
• Authorised Inspector relationship: an inspection agency must sign off during shop work and hydrotest. Negotiate this early, as inspectors are in short supply in busy regions.
• Air permitting support: your customer holds the permit, but you must supply the data. Under EPA's NSPS for stationary combustion turbines, Subpart KKKK, HRSGs and duct burners associated with a turbine are covered by the turbine rule and exempt from the utility boiler standard in Subpart Da. EPA published a proposed review of the turbine standards in January 2026, and some PSD permits already set NOx limits tighter than the federal floor. Know the current limits before you guarantee emissions performance.
• OSHA, state boiler laws and local inspection: installed units also fall under state boiler inspection regimes, which vary by state, and you should map the three or four states you will sell into.

United Kingdom

• Pressure Equipment (Safety) Regulations 2016: the UK counterpart to the EU directive, covering design, manufacture and conformity assessment of pressure equipment placed on the Great Britain market.
• UKCA marking: pressure equipment for sale in Great Britain has needed UKCA marking since 1 January 2023, although manufacturers can alternatively use a European Notified Body and CE marking. Higher-risk categories require independent third-party assessment by an approved body such as HSB UK, TUV or DNV.
• Boiler examination in service: operators run written schemes of examination under the pressure systems regulations, which creates recurring inspection and repair demand for your service arm.
• Environmental permit: combustion plant above relevant thermal input thresholds needs an environmental permit from the Environment Agency (or SEPA, NRW), and the manufacturer supports the emissions data pack.

European Union and India

• EU Pressure Equipment Directive 2014/68/EU: applies to equipment with a maximum allowable pressure above 0.5 bar, so every HRSG falls within it. Conformity is assessed through a Notified Body, and Module H, full quality assurance, is a common route for series production.
• India, Indian Boiler Regulations 1950: boilers and boiler parts used in India must meet the IBR, and imported items need an independent design appraisal, welder certification and inspection endorsed by a designated Inspecting Authority. An exporter that cannot produce those papers cannot ship.

Six Ways HRSG Startups Lose Money

These come from the pattern of what goes wrong in thermal equipment businesses, and each one can be designed out of a plan before a dollar is spent.

1. Bidding fixed price on a design you have not finished

Early-stage HRSG bids often rely on a preliminary thermal design, then the final design needs more surface area to hit the guaranteed steam flow and stack temperature. Every extra row of tubes is cost you cannot pass on. Price an explicit design contingency of 3% to 6% and put a design freeze date in the contract.

2. Ignoring cycling when you guarantee reliability

Units that start and stop daily fail differently from baseload units. Thermal fatigue sits behind flow-accelerated corrosion as the second major tube failure mechanism. If you warrant a unit for 20 years and the customer later runs it twice-shifted, you will meet the repair bill. Write the duty cycle into the contract and design to it.

3. Underfunding retainage and milestone gaps

A fabricator who spends $1.4 million on material and labour before the 30% shipment milestone is paid has financed the customer. Model the cash trough month by month. It is common for the peak working capital need to be 25% to 40% of contract value on a single large order.

4. Buying tube and plate on the spot market

With the OEMs full and component lead times long, a late material delivery pushes the whole schedule. Lock material pricing early for alloy grades, accept a carrying cost, and name two qualified mills for each critical item.

5. Treating the stamp as a formality

A QA manual written by copy and paste fails its first audit and costs you months. The practitioners' range of $20,000 to $80,000 for implementation is a fair guide. Budget for a code consultant, qualify welding procedures well before the first order, and hold a mock audit.

6. Forgetting the service tail

The business that sells a unit and walks away has handed the next ten years of spares, inspections and retubes to a competitor. A plan that builds in a service agreement at delivery has predictable recurring revenue, and lenders pay attention to that.

Terms You Must Use Correctly

A credit officer from a non-engineering background will check your plan against an HRSG glossary, and an engineer reading it will notice if you misuse a term. These definitions are worth putting at the back of your plan.

• Pinch point: the smallest temperature difference between exhaust gas and water or steam in the evaporator. A tighter pinch recovers more heat but needs more surface area, and so more cost.
• Approach temperature: the gap between economiser outlet water temperature and the saturation temperature. Too small an approach risks steaming in the economiser.
• Supplementary firing (duct burner): burners in the gas path that raise steam output above what the exhaust alone supports, widely used in cogeneration for flexible steam.
• Harp: a tube bank assembly of parallel tubes between headers, the usual unit of module replacement in an aftermarket quote.
• Once-through design: a configuration with no drum, in which feedwater converts to superheated steam in a single pass, favoured for fast starts.
• Flow-accelerated corrosion (FAC): metal loss caused by flowing water or two-phase flow stripping the protective oxide layer from carbon steel, the leading cause of HRSG tube failure by published statistics.
• Stack temperature: exhaust gas temperature at the stack outlet, the headline efficiency indicator, and a common performance guarantee in contracts.
• Hold point: a stage in fabrication where work stops until the authorised inspector has witnessed and approved it.

Tools worth naming in the operations section of your plan: Thermoflow for thermal design, Codeware COMPRESS or a similar package for code calculations, AutoCAD Plant 3D or SolidWorks for modelling, and ANSYS Fluent for gas-side flow distribution studies. Lenders do not need to know them in depth, but naming them shows you have staffed a real engineering function.

Sample Business Plan Preview

Here is the structure and financial output a buyer receives, generated from the same assumptions used throughout this page.

What's in the Template

Every Avvale business plan template includes these sections, pre-structured for your industry:

• Executive Summary — Your business at a glance, written to hook investors in 60 seconds
• Company Overview — Legal structure, ownership, location, and founding story
• Industry Analysis — Market size, growth trends, and the regulatory picture
• Customer Analysis — Target buyers, pain points, and spending patterns
• Competitor Analysis — Local competitive mapping and your differentiation strategy
• Marketing Plan — Channels, messaging, and customer acquisition strategy
• Operations Plan — Day-to-day workflows, staffing structure, and key milestones
• Management Team — Founder bios, advisory board, and key hires planned

The optional Financial Forecast add-on (included in our $300/£250 and $1,000/£800 packages) provides a 5-year Excel model with income statement, cash flow, balance sheet, break-even analysis, and startup capital requirements. For an HRSG business we build the milestone billing curve, retainage and warranty reserve into the model so the forecast shows the cash trough, not just the profit. If you want the structure without the numbers, start with the free business plan template, or read more about how we work on the business plan writer page.

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