Power Air Quality Insights No

· " Where Are the High Growth Air and Water Opportunities?” is "Hot Topic Hour" on May10, 2012

Answers to this question will be provided on May 10 in a 90 minute webinar conducted by the McIlvaine Company. The merger of Tyco Flow Control and Pentair coupled with the acquisition of Howden by Colfax indicate the recognition of a $330 billion market which covers the movement of gases (including air) and liquids (including water) as well as their control and treatment.

There are a number of very attractive growth segments which provide opportunities for expansion and acquisition. Here are some of them which will be identified and quantified in the session:

· International shipping including ballast water treatment and stack gas cleanup while burning bunker fuels,

· Sales of equipment to reduce air toxics and to regulate water extraction and discharge to receiving streams and lakes based on U.S. EPA regulations for power plants.

· New approaches to NO_x and odor control of air and disinfection of water including use of chemicals and UV oxidation techniques,

· Potential for innovative technologies created by a more holistic view of opportunities such as co-locating municipal wastewater treatment and power plants,

· The evaluation of China as both a market for products and services and potential breeding ground of international competition,

· Necessity of evaluating all international growth opportunities through the prism of purchasing parity and adjustments for inflation,

· Leveraging various product combinations for highest growth. The advantages of chemicals, filter media and other consumables as opposed to components, instrumentation or systems.

This session is available free of charge to any subscriber to McIlvaine air or water related market reports. It is available at a price of $400 for non-subscribers. However, this payment is deductible from future report purchases.

To register for the Hot Topic Hour on Thursday, May 10 at 10 a.m. (Central time) click on:

On Thursday at 10 a.m. Central time, McIlvaine hosts a 90 minute web meeting on important energy and pollution control subjects. Power webinars are free for subscribers to either Power Plant Air Quality Decisions or Utility Environmental Upgrade Tracking System. The cost is $125.00 for non-subscribers. Market Intelligence webinars are free to McIlvaine market report subscribers and are $400.00 for non-subscribers.

DATE	Non-Subscribers Cost	SUBJECT	Webinar Type
April 26, 2012	$125.00	Particulate and Condensable Removal	Power
May 3 and 4, 2012	$125.00	Flyash Pond and Wastewater Treatment Issues	Power
May 10, 2012	$400.00	$330 Billion Market for Air/Gas/Water/Liquid/Flow and Treatment (high growth segments plus regulatory, technology, application, and market drivers)	Market Intelligence
May 17, 2012	$125.00	Role of Renewable Energy in U.S. and World	Power
May 24, 2012	$125.00	Status of Carbon Capture Programs and Technology	Power
May 31, 2012	$400.00	Air Pollution Control Markets (geographic trends, regulatory developments, competition, technology developments)	Market Intelligence
June 7, 2012	$125.00	Dry Sorbent Injection and Material Handling in Coal-fired Power Plants Plants	Power
June 14, 2012	$125.00	Report from Power Gen Europe (update on regulations, speaker and exhibitor highlights)	Power
June 21, 2012	$400.00	Pumps and Valves (impacts of mergers, new markets, market drivers, forecasts)	Market Intelligence
June 28, 2012	$125.00	Greenhouse Gas Strategies for Coal-fired Plant Operators	Power
July 12, 2012	$125.00	CFB Technology and Clean Coal (Update on CFB Reactor Technology)	Power
July 19, 2012	$400.00	Future for Coal, Gas, Nuclear and Renewables (forecasts by region and discussion of market drivers and regulatory constraints)	Market Intelligence
July 26, 2012	$125.00	Beneficial Byproducts of Coal Combustion and Gasification	Power
August 2, 2012	$125.00	Mercury Control and Removal Status and Cost	Power
August 9, 2012	$400.00	Filter Media (forecasts and market drivers for media used in air, gas, liquid, fluid applications both mobile and stationary)	Market Intelligence
August 16, 2012	$125.00	Report from Coal-gen (highlights of speeches and exhibitions)	Power
August 23, 2012	$125.00	Report from Mega Symposium (highlights of speeches and exhibitions at this important air pollution conference)	Power
August 30, 2012	$400.00	Instrumentation for Air, Gas, Water, Liquids (forecasts , market shares, growth segments)

Prices of equipment, services and consumables utilized in air and water pollution control have risen 9 percent in the two years starting with the spring of 2010. This is a world average and varies considerably in individual countries

Typically, market forecasts (McIlvaine is no exception) are based on the value of the dollar as of a certain year. If the user of the report wants to determine the revenue forecast in actual dollars for a current or future year, he must add in an inflation factor. McIlvaine uses a base year of 2010. On a world basis, 2011 revenues have to be multiplied by 1.05 and projected 2012 revenues have to be multiplied by 1.05 x 1.04 or 1.09 to convert revenue forecasts to current dollars.

The prices for environmental equipment and services are up about two percentage points above general inflation which has been 7 percent worldwide in the two year period.

Inflation rates vary considerably from country to country. They range from 10 percent in Turkey to 1 percent in Sweden.

In general, the price hikes are large and do not take place yearly but in reaction to changes in material and energy costs. Here are some examples:

Company	Product	% Increase	Month	Year
Bonney Forge	Cast Steel valves	6.5	6	11
A.Y McDonald	Submersible turbine pumps	5	11	11
A.Y McDonald	Dewatering pumps	6	11	11
Sherwood	All valves	4-7	9	11
Kennedy Valve	Fire control valves	7	2	12
Ahlstrom	Filtration media	Up to 12	1	11
Dow	Filtration membranes	Up to 12	1	11
Dow	Ion exchange resins	Up to 10	11	10
Xylem Canada	Water and wastewater products	2.5	6	10
Amway	Air purifier	25	9	11
Amway	Carbon replacement filter	8	9	11

Another requirement is to adjust revenue figures to the pricing in individual countries. Where the market is set by import prices then this is not a requirement. However, when the prices are set by in–country competition, it is necessary to adjust market forecasts to reflect the local pricing. This can be done on an approximate basis by comparing nominal GDP to purchasing power parity GDP.

Country	2011 Purchasing Power Parity : $ Trillions	2011 GDP Nominal - $ Trillions	Ratio
United States	15	15	1
China	11.2	7.3	0.65
India	4.5	1.7	0.37

China has built its manufacturing base to build higher technology products. As a result, local competition sets the pricing for more products than in India which must still import much of the high technology products. Chinese local pricing has risen substantially in recent years and is now at 65 percent of the U.S. level. This is in contrast to India where prices of locally manufactured goods are only 37 percent of the U.S. level.

Details on price increases, inflation and purchasing parity are included in all the McIlvaine air, water and energy market reports. For more information on these reports, click on: www.mcilvainecompany.com.

Expenditures for portable, laboratory and continuous measuring instruments for air and water will exceed $14.1 billion this year. This is the forecast made by McIlvaine in its Air and Water Monitoring publications. (www.mcilvainecompany.com) The definition of the market is based on the McIlvaine concept of “decisive classification” rather than scientific or literal classification. Some process analyzers, software and transmitters are included in the forecast because this is the way many of the suppliers view the market and, most importantly, the segmentation which purchasers use to sort through the alternatives.

World Air and Water Instrumentation Revenues 2012 ($ Millions)
	Laboratory	Portable and Field, Emergency Response	Online Continuous Plus Software	Ambient- Fence Line, Remediation	Total
Municipal Water/Wastewater, Agricultural, Aquaculture	1,000	500	800	700	3,000
Oil, Gas, Refining, Chemical	300	200	1,000	300	1,800
Mining and Minerals	80	20	500	100	700
Electronics and Pharmaceutical	150	50	280	20	500
Pulp/Paper, Food, Beverage and Miscellaneous Industrial	100	100	300	100	600
Power Including Nuclear, Fossil, Hydro, Renewables	800	400	2,400	400	4,000
Government, Military and Academia	1,000	500	200	300	2,000
Commercial, Including HVAC Cooling, Restaurants, Pools and Spas, Vessels	400	700	400	0	1,500
Total	3,830	2,470	5,880	1,920	14,100

Oxygen measurement is one of the largest segments in the air and gas sector. It is used for control and safety in combustion applications. It is also used for inerting systems and gas storage. It is used to determine the quality of CO₂ used in brewing. It is one of a number of parameters measured with air pollution continuous emission monitor systems.

Dissolved oxygen measurements in water are a major water segment with analyzer revenues approaching $200 million/yr. Continuous monitors are needed in beverage, aquaculture and remediation. Accurate pH, O₂, conductivity and turbidity measurements are critical in modern wastewater treatment.

This year $1 billion will be spent for continuous emission monitoring systems for stack gases. It is divided into the following categories:

One of the fastest growing segments is continuous monitors for oil and gas. Water quality instrumentation is needed to monitor aquifers and surface water in proximity to shale gas operations. Gas chromatographs can continuously measure natural gas Btu content, an important parameter in energy transactions.

The total process control and instrumentation market exceeds $70 billion worldwide. The measurement and control of gases and liquid processes is just a small portion of the total, but it is difficult to completely compartmentalize this portion. The oil and gas and chemical sector listed above accounts for more than $15 billion in process instrumentation purchases including the following segments:

Oil, Gas, Refining, Petrochemical, Chemical Process Instrumentation Revenues 2012
Product Category	$ Billions	Air/Water Inclusions
Process Control Systems	4.0	0.2
Control Valves and Actuators	4.2	0.0
Application Software	1.2	0.1
On-Line Process Analyzers	1.6	0.4
Flow, Temperature, Pressure, Level Transmitters	4.0	0.3
Total	15.0	1.0

Only $1 billion out of a total expenditure of $15 billion is included in the McIlvaine air/water forecast.

For more information on McIlvaine Air and Water Monitoring publications, click on:

Sales of air pollution control systems will exceed $51 billion this year. The power industry will account for nearly half the purchases. This is the finding of the McIlvaine Company based on aggregating information from its various market reports.

2012 World Revenues for Air Pollution Control Systems ($ Billions)
	Product	Power	Industrial	Total
	Fabric Filter	1	5	6
	Scrubber	0	5	5
	Precipitator	7	1	8
	FGD	7	0	7
	DeNO_x	6	1	7
	Thermal/Catalytic	0	2	2
	Fans and Compressors	4	12	16
	Total	25	26	51

Fabric filters have not yet penetrated the worldwide power industry. As a result, sales to the cement, steel, mining and other industrial segments will be five times larger than sales to the power segment. In future years this ratio is predicted to change substantially as power plants replace precipitators with fabric filters to meet new regulations on air toxics and fine particulate.

The FGD systems purchased by the power industry are similar to the scrubbing systems purchased by the industrial sector. The power plant purchases of DeNO_xsystems using catalyst will greatly exceed the combined DeNO_x and thermal/catalytic systems purchased by industry.

There will be substantial purchases of fans and compressors associated with these systems. When air pollution control equipment is added to existing combustion systems it creates substantial back pressure. This often results in replacement of existing system fans.

Asia will account for more than half the air pollution control system purchases. China will purchase more power plant air pollution control equipment than all of the European countries combined.

The market has become global. Some of the largest suppliers are home based in Europe and Japan. China has the leading precipitator companies in terms of revenue generation. The U.S. leads in terms of production of filter media. The U.S. is also the leader in FGD systems. However, this leadership is based on the inclusion of Alstom, a French company, as a U.S. based supplier. Its air pollution operations are in Tennessee and have been since it acquired Combustion Engineering many years ago.

Not just in the sunny southwestern United States but around the world large scale solar energy projects are under way. McIlvaine tracks these projects in Renewable Energy Projects and Update.

3Power Energy Group Inc. announced that the company entered into a frame agreement with a Chinese Investment group to acquire 100 MWt PV Solar Power Plants from their portfolio in Italy. Projects are financed and produce electricity into the national grid under long term power purchase agreements.

The projects are located in several high sun radiations regions in Italy. The total investments in these projects are quoted around U.S. $500 million out of which $400 million are financed by long term banks credit facility. The projects when acquired will be an immediate source of 15 years sustainable revenues under a power purchase agreement at prefixed price.

BrightSource Energy, Inc., a leading solar thermal technology company, announced that Sasol has selected BrightSource’s power tower solar thermal technology following a worldwide review of solar technologies. Under the agreement, BrightSource and its partner Alstom, global leader in power generation equipment, will conduct a comprehensive front-end engineering and design (FEED) study for the South Africa market.

The FEED study is a critical step in the design and deployment of a solar thermal power plant. Sasol will use the information from the study to determine how best to deploy BrightSource’s technology in the markets it serves.

“Sasol looks forward to the completion of the FEED study by one of the world’s leading concentrated solar power (CSP) technology providers. South Africa is blessed with an abundance of a natural energy source in the form of sunlight. This CSP project has the potential of significantly expanding Sasol’s new energy portfolio and will in turn contribute to the country’s transition to a low carbon economy,” said Henri Loubser, Managing Director of Sasol New Energy.

To meet its growing clean power demand, South Africa’s Renewable Energy Independent Power Producer Procurement Program, run by the country’s DOE, is targeting the addition of an initial 3,725 MW of renewable energy by 2016. With one of the fastest growing economies in the world, total energy supplies in South Africa are projected to more than double over the next 20 years to more than 85 gigawatts, including the planned development of 18 gigawatts of new renewable energy, according to the integrated resource plan recently adopted by the government.

Torresol Energy, a joint venture between Masdar – Abu Dhabi’s renewable energy company and SENER – the Spanish engineering and construction firm, announced at the World Future Energy Summit in Abu Dhabi that the Valle 1 and Valle 2 plants – two identical 50 MW parabolic trough plants, located in Cádiz, in the South of Spain, had commenced commissioning in January 2012. The plants are equipped with thermal storage which will allow them to continue to produce power, even when there is no solar radiation, for up to 7.5 hours.

Construction on Valle 1 and Valle 2 began in December 2009, and was completed in December 2011. In January 2012 the plants were connected to the Spanish national grid for commercial operations. Roughly 4,500 workers worked over 2,700,000 hours to build and launch the twin projects during the two construction years.

SENER led the Engineering, Procurement and Construction (EPC) contract for the two projects, as project manager, and has provided 100 percent of the technology and engineering for both plants. From the outset, the two plants were built sequentially, including processing various types of supplies, overseeing multiple contractors, providing quality control of the execution and, above all, planning and supervising construction as it progresses.

Each of the plants will produce 160 GWh of power per year, equivalent to the amount of power consumed by 40,000 households.

Leadcom Integrated Solutions designed and successfully implemented three large-scale solar power systems for one of the world’s largest telecom operators. The systems were implemented in Chile’s Atacama Desert, an area with very harsh climate conditions, where day and night temperature vary by more than 30º. The completion of this project marks another success story for Leadcom, further enhancing its credibility in the alternative energy space for telecoms. In these projects, Leadcom combines its capabilities, knowledge and experience in project management, civil works, electricity, logistics and implementation in difficult areas. During the implementation phase, Leadcom used more than 40 field technicians.

Leadcom is one of the world’s largest telecommunications groups. The group operates dozens of subsidiaries worldwide, primarily in Africa, Central and South America. It currently employs over 700 employees around the world and is a supplier of services in the field of deployment of telecommunication infrastructures.

To support the rapid increase of communication traffic (data and voice), the operator needed to expand the capacity of 3 fiber optic nodes that are part of Pan American Fiber Optic Network connecting Chile to Peru, located in the Atacama Desert, 1,200 km from Santiago.

The solution includes battery cycling technology and large PV (solar) arrays (16kWp each) to maintain the charge of the batteries and keep the site powered 24/7.

Solar Frontier activated the Mt. Komekura Solar Power Plant in Yamanashi Prefectrue, Japan. Solar Frontier supplied 10 MW of CIS thin-film solar modules to the power plant through Meidensha Corporation. The facility, operated jointly by Yamanashi Prefecture and Tokyo Electric Power Company (TEPCO), started operations recently and is among the largest solar power plants in Japan.

The Mt. Komekura Solar Power Plant is being built as part of Yamanashi Prefecture’s Global Warming Countermeasures Plan for eliminating greenhouse gas emissions. The plant is expected to generate about 12 million kWh of electricity annually, equal to the annual electricity use of approximately 3,400 households.

Solar Frontier’s CIS thin-film solar modules have achieved a higher conversion efficiency rate than many other thin-film modules, and they are able to deliver higher overall energy output (kWh) under real weather conditions. In Japan, the outstanding performance of CIS thin-film solar modules has been demonstrated at the Yukigunigata Megasolar power plant in Nilgata Prefecture and at large-scale solar power production facilities at Solar Frontier’s Miyazaki production plants.

Solar Frontier started operation of all production lines at its gigawatt-scale Kunitomi Plant in 2011, becoming one of the world’s largest solar module factories. With its large-scale production enterprise, the company will be able to supply increasing demand for solar power in Japan as a result of the enactment of Feed-in-Tariffs in July this year while continuing to supply customers around the world.

Canadian Solar announced an agreement with the Al Fahad Group, a diversified conglomerate with expertise in Defense & Intelligence, Homeland Security, Networking & Communications and Power.

Under the agreement, Canadian Solar will supply more than 1.5 MW of its solar modules to the Al Fahad Group, which is spearheading one of the largest solar PV projects in Abu Dhabi, considered one of the pioneers for renewable energies in the Middle East. This will be a governmental venture, which was agreed upon during the recent World Future Energy Summit (WFES) held in Abu Dhabi.

2012 Projected Inflation Rate
Country	Percent
China	3.6
Germany	2.0
India	7.5
Sweden	1.0
Turkey	10.0
U.S.	2.6

Stack Gas Continuous Emissions Monitor Revenues 2012
Segment	Percent
Power	50
Oil, Gas, Refining, Chemical	20
Municipal Wastewater	5
Mining and Minerals	10
Other	15