Power Air Quality Insights No

				Power Air Quality Insights No. 55 May 10, 2012

WELCOME

The following insights can be sent to you every week. This alert contains the details on the upcoming hot topic hour, breaking news, and the headlines for the Utility E Alert for the previous week. This is one of a number of free services. You can sign up for any of these newsletters and of course request to be removed from the mailing list at any time. See registration following the newsletter.

· “Role of Renewable Energy in U.S. and World” is Hot Topic Hour on May 17, 2012

· Large Players in Air and Water Need to Follow Inorganic Growth with Organic

· NO_x Control Equipment and Consumables Revenues Will be $6.8 billion This Year

“Role of Renewable Energy in U.S. and World” is Hot Topic Hour on May 17, 2012

Various reports by governmental and private institutions have concluded that renewable energy resources such as solar, wind, hydropower, geothermal, tidal and biomass including landfill gas, along with significant improvements in the efficiency of electricity production and delivery systems such as smart grids, can provide up to 40 to 50 percent of electric power needs in the U.S. by 2025 to 2030. All of these renewable sources are being employed today in the U.S. to differing extents with different success rates. Renewable energy currently accounts for a bit over eight percent of total generated electricity. However, after rising rapidly over the past few years, investment in renewable energy has slowed significantly this year.

This slowdown may be caused by the expiration on Dec. 31^st of the U.S. Treasury grant program offering as much as 30 percent of development and construction costs for renewable energy plants and expectations that the Production Tax Credit, which grants an incentive worth 2.2 cents per kilowatt-hour of wind power will not be renewed when it ends this December. But it may also be the result of the recently proposed and enacted air and water environmental regulations affecting the utility industry. The industry may just be on hold while they study the entire situation and decide what power plants they will shut down and how they will replace the electricity required to meet their demand.

The following speakers will discuss the various renewable energy technologies and address the issues related to the use of renewable sources for power generation. They will address these and other questions:

· What are the regulatory, environmental and/or technical impediments to implementing the various forms of renewable energy now?

· What business models are developing and how are utilities planning to utilize renewable energy sources?

· What are some of the best examples of the use of renewable energy for power generation both in the U.S. and abroad?

· Who are the key players in the industry and how are they developing the market?

· How will the various technologies develop in the next ten years and will there be a clear winner?

· Which innovations in technologies will contribute to decreasing the cost for renewable energy?

Paula Mints, Director Energy and Principal Analyst for the Solar Services Program at Navigant, will discuss the current state of the dynamic, volatile global solar industry including the new low incentive reality it faces.

Thomas (Tom) J. Maestri, Director of Renewable Energy Programs at Synagro Technologies, Inc, will discuss “The Role of Bio-solids in Renewable Energy.” Bio-solids, the residual material generated day-in and day-out as a natural byproduct of wastewater treatment can and should play a valuable role in the overall effort to maximize renewable energy production both in the U.S. and throughout the world. With an organic content averaging approximately 75 percent, bio-solids can be anaerobically digested to produce methane or dried and used directly as a fuel source. In addition, R&D efforts are underway to expand the use of bio-solids for gasification applications. His presentation will outline the common uses of bio-solids in renewable energy as well as offer the advantages and disadvantages of each.

To register for the “Hot Topic Hour” on Thursday, May 17 at 10 a.m. (Central time) click on:

The Electric Power conference next week will be rich in intelligence about all the issues which are facing the industry. McIlvaine will be asking speakers and exhibitors to provide their opinions about the future. Here are the questions which we will address:

We will be gathering answers to these questions at the show and will discuss those answers with participants.

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
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 18, 2012	$125.00	Electric Power Highlights	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)

§ First Energy explains to PSC Reasons for Closure of Albright, Rivesville and Willow Island

§ GE Consortium to develop 500 MW Combined Cycle Power Project in Darwin, Australia

§ GreenGen Starts Up Gasifier at China’s First Near-Zero-Emission Coal-Fired Power Plant

§ Oxyfiring Successfully Begins at Australia’s Callide Oxyfuel/CCS Project

§ SaskPower Reaffirms Commitment to $1.2 Billion CCS Project in Saskatchewan

§ Jordan shortlists Mitsubishi/Areva and Atomstroyexport for Nuclear Power Plant

§ Canada’s Natural Resources Minister OKs Ontario Power’s Darlington Nuclear Power Plant Expansion

Many of the larger companies in the air and water equipment and service industries have grown substantially due to inorganic growth. Acquisitions boost revenues and total profits. The challenge is now to increase earnings as a percent of sales. This can be best done with prioritized organic growth. Details on a program to achieve this growth are detailed by McIlvaine Company in its comprehensive Air/Gas/Water/Fluid Treatment and Control: World Markets.

This category should be the first priority because of the low investment and risk. There are two ways to accomplish this type of organic growth without creating new products.

New applications and industries: The wave of mergers has set up very attractive opportunities for large players to expand product lines into new industries. Xylem has a great penetration with its pumps in municipal wastewater treatment plants around the world. The recent acquisition of YSI will allow it to pursue the municipal market for monitoring and instrumentation. Pentair and Tyco have complimentary industry strengths and product lines, so the merged company can leverage this synergy.

Colfax and Howden can combine the complimentary liquid and gas handling equipment with unique industry strengths. “This is a transformational acquisition for Colfax that accelerates our growth strategy, enhances our business profile and continues our journey to becoming a premier global enterprise," said Mitch Rales, Colfax Chairman.

GE has acquired Dresser and can leverage many of the synergies between turbines and valves in power and oil and gas industries. “GE and Dresser are a natural fit together. We share a commitment to technology and innovation and we have many common customers in the energy space,” said John Krenicki, vice chairman of GE and president and CEO of GE Energy in February 2011 when the deal was completed.

The achievement of these synergies has proven difficult for acquirers in the past. One of the reasons is the natural resistance among divisions to share knowledge and therefore power. Business experts say that the secret is creating a collaborative environment. They further recommend that a third party be utilized to help engender this collaborative atmosphere.

Expanding geographic reach: Most large international companies are not achieving the same high market share in Asia which they enjoy in other areas. Here are some examples:

Company	Asia/Pacific % Total Revenue
Xylem	12
Flowserve	18
Tyco/Pentair	10
Emerson Process	24
Cameron	5
Product-World Market
Pumps	40
Valves	39
Cartridges	33
Air Pollution Control Equipment	60

Asia is the largest current market and the fastest growing for almost all segments in air and water. The typical international player could substantially increase revenues by increasing the Asian market share.

Most companies have no trouble reading or communicating in English. However, the specific terms which distinguish one product from the others are often not translated correctly. McIlvaine has developed a “Decisive Classification System” in English and Chinese to overcome this problem.

A second challenge is to convince the purchasers of the lower life cycle cost of the international product as opposed to the local one with the lower initial cost. Thanks to all the available digital communications this challenge can be effectively addressed.

The biggest potential increases in profits come from developing proprietary products and services with lower life cycle costs. This can be accomplished with both product and application research. Companies should be pursuing more fundamental research to develop products without a pre-determined market in mind. At the same time, they should be tailoring existing products to developing markets. Furthermore, the big players can be pro-active and help create new markets.

Industry	2012 Expenditure $ Billions	% of Total	Research Intensity R&D/Revenues %
Machinery	10	03.33	4
Pharmaceuticals	45	15.00	13
Computer/Electronics	60	20.00	11
Information	45	15.00	4.5
Other	140	46.66	4.5
Total	300	100.00	6

Industrial equipment providers including those in the air and water segments are spending very little on basic research and not much more on applied research. The machinery manufacturers as a group account for just over 4 percent of research and development (R&D) in the U.S. By contrast, the pharmaceutical, computer/electronics and information groups account for 50 percent of all research. The pharmaceutical industry spends 13 percent of revenues on R&D. The true R&D for the air and water industry is less than 2 percent. Furthermore, air and water R&D tends to be government funded even though companies such as ADA-ES are actually doing the work and are being remunerated to do so.

The large players in air and water can justify increased R&D based on the expanded inorganic revenue base. There are numerous examples of developments which have created very large and profitable revenues streams, e.g. Goretex (organic) or Filtrete (inorganic).

There is a larger and bigger profit potential in developing whole systems. McIlvaine has identified the co-location of power plants and municipal wastewater treatment plants as one initiative which would create high potential for profitability.

NO_x Control Equipment and Consumables Revenues Will be $6.8 billion This Year

Revenues for suppliers of stationary NO_x control systems, catalysts and reagents will exceed $6.8 billion in 2012. The biggest markets for new systems are in Asia whereas the greatest purchases of catalysts and reagents are in the U.S. and Europe. This is the conclusion reached in the McIlvaine report, NO_x Control World Markets. (www.mcilvainecompany.com)

China has already passed all other countries except the U.S. in terms of investment in selective catalytic reduction (SCR) systems. At the rate it is installing additional units it will surpass the U.S. in 2014. However, since catalyst life is more than three years, it will be 2020 before China is also the largest catalyst consumer.

The largest investment in NO_x control is for SCR for coal-fired power plants. Gas turbines also utilize SCR but there are fewer MW of capacity equipped with SCR. Also, the cost is lower due to the spacing in the body of the catalyst. Because of the dust in coal-fired power plants, the catalyst has larger openings and is more expensive.

The European and U.S. experience relative to catalyst life is somewhat different. Replacement is more frequent in the U.S. due to poisoning and plugging. However, a substantial industry has been created to renovate or regenerate used catalyst.

There are some surprises relative to reagent choices. The low cost but potentially less safe anhydrous ammonia is the most popular choice in Europe. While it is also popular in the U.S., there have been a number of plants who have opted for aqueous ammonia. Another U.S. development is the purchase of solid urea which is converted to ammonia onsite. China has also favored this more costly but safer approach.

Catalysts are being re-designed to address two pollutants in addition to NO_x. The older catalysts convert 1 percent of the SO₂ in the flue gas to SO₃, which can result in “blue haze” at the stack. This harmful conversion can be reduced by different catalyst formulations. Catalysts also have the potential to oxidize mercury to a soluble form for downstream capture in wet scrubbers. Many purchasers are willing to pay considerably more for their catalysts in order to minimize all three pollutant emissions.

In addition to the power industry there are a number of other smaller applications for stationary NO_x control units. Cement plants are major NO_x emitters. Many waste-to-energy plants are fitted with either selective catalytic reduction or selective non–catalytic reduction systems.

The installation of solar panels has provided cost savings to school districts around the world. McIlvaine tracks these installations in Renewable Energy Projects and Update.

AU Optronics announced that it is ready to provide its customers with U.S.-made solar solutions. The progress enriches AUO’s global solar module capacity to span across Europe, America, and Asia. It also makes AUO one of the few international suppliers capable of offering U.S.-made solar solutions. Further development in the U.S. market has been marked by the acquisition of a 9 MW Solar Power Project in the Pennsylvania School District, which will be the largest solar power plant in Pennsylvania as well as one of the largest school district projects nationwide. AUO will continue to provide top-notch customized solar solutions to the U.S. customers.

Arizona’s Buckeye Union High School District Dedicates 4.29 MW Solar Generation Project from Constellation Energy

Constellation Energy and the Buckeye Union High School District, announced the completion of an aggregate 4.29 MW (DC) solar generation project. Baltimore-based Constellation Energy’s retail business owns and will maintain the solar power systems. In return, the school district will purchase and receive all of the electricity generated by the solar panels at a fixed rate from Constellation Energy under a 25-year solar services agreement.

Located at three sites – Buckeye Union High School and Youngker High School in Buckeye, AZ and Estrella Foothills High School in Goodyear, AZ – the installations collectively generate enough electricity to power the three high schools, meeting up to 70 percent of the school district’s electricity needs.

The installations, which were developed by GV Enterprises and REgeneration Finance and built by CORE Construction, were facilitated, in part, by the Arizona Corporation Commission-approved APS Renewable Energy Incentive Program. This program offers financial incentives, covering up to 40 percent of the installation costs, to customers who add renewable energy systems to their homes or businesses.

The solar power systems are comprised of approximately 15,468 photovoltaic panels, located on 29 carport rooftop structures and on two ground-mounted installations. The project is expected to generate more than 7 million kWh of electricity per year.

PowerPlay Solar Commissions 2 MW Solar Field at Berkshire School in Sheffield, MA

PowerPlay Solar Development, an integrated solar development and finance company based in Ridgefield, CT announced the commissioning and commencement of operation of the 2 MW, 9 acre photovoltaic solar plant developed by the company at Berkshire School in Sheffield, MA. The project is currently the largest operating solar facility of its kind at any school or college in New England.

PowerPlay Solar Development designed and constructed the project in collaboration with Spire Solar Systems, a solar systems design builder based in Bedford, MA. The Berkshire School ground-mounted system is composed of 8,332 high performance crystalline silicon solar panels manufactured in the U.S. by SolarWorld.

The solar field will generate approximately 45 percent of the school’s electricity needs and is part of the school’s broad sustainability master plan submitted by Berkshire students to the school’s Board of Trustees. An important cornerstone of the plan is having the school achieve carbon neutrality by 2016.

The 35-meter-long photovoltaic pavillon adds the finishing touch to the university campus of Potsdam University of Applied Sciences and is to be used as a space for social events, brainstorming ideas and presentations. The Odersun solar modules, which are just under 4 meter high and 1 meter wide, cover the whole building. Made from 25 mm-thick break-proof security glass, the PV modules act as façade elements and were specially developed and manufactured for this project.

The idea of integrating the green building concept into the redesign of the campus site was part of the project from the outset. Architects Ortner + Ortner Berlin developed this idea further in conjunction with students from the University of Applied Sciences and module manufacturer Odersun which specializes in solar architecture. The result is a symbiosis of sustainable architecture, functionality and efficiency – in short, a solar façade that not only generates power, but is also aesthetically attractive.

Odersun not only manufactured the project-specific modules, it was also involved in a supportive capacity in the electrical concept and the construction planning. Odersun’s CISCuT thin-film technology gives the architects the same design freedom similar to glass while at the same time allowing them to achieve sustainable building goals.

Thin-film solar modules such as those produced by Odersun are particularly suitable for use in building-integrated photovoltaics (BiPV), because they offer very good yields even in shade and at high temperatures, and even If they are not optimally aligned to the sun.

Stationary NO_xControl Revenues 2012 ($ Millions)
SCR systems	4,300
Catalyst new	1,200
Catalyst regenerated	400
Reagents	900
Total	6,800