Water Market Insights No

Water Market Insights
No. 3 May 11, 2012

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· More Than 2,900 Exhibitors from 54 Countries Exhibiting at IFAT ENTSORGA 2012 This Week

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

· Market for Water and Wastewater Treatment Chemicals Will Approach $25 Billion Next Year

· Headlines for the April North America Municipal Wastewater Treatment Facilities and People

This exhibition in Munich, Germany is heavily focused on wastewater issues. Here are some of the highlights:

In 2010 around 1,000 new biogas plants were constructed in Germany, which was about the same high level as in 2009. And in 2010 alone, sales in the biogas sector reached around 4.7 billion euros. At present the German manufacturers of biogas plants make around 80 percent of their turnover on the domestic market, but export sales are becoming ever more significant for these companies and their development. According to a survey by market researchers trend: research, the number of biogas plants in the 16 European countries studied in the report will more than double by 2020, to over 16,000. More and more countries are laying down the legislative framework needed to boost growth in the biogas sector in their countries. The system practiced in Germany for some years now, of feed-in tariffs for electricity generated from renewable sources is now establishing itself gradually throughout Europe. According to the analysts at trend: research Italy, alongside Germany, is currently offering the most attractive rates and thereby creating the foundation for faster growth than the European average. Other nations are catching up. Even the more market-oriented Great Britain introduced a feed-in tariff last year for decentrally generated electricity from anaerobic fermentation. For April 2011 the tariff is being extended to include thermal energy generated from biogas and biomass.

Large, new markets with expectations of rapid growth are to be found above all in Eastern Europe, for example in the Czech Republic, Slovakia and Hungary, according to a joint study undertaken by the consultants ecoprog and the Fraunhofer Institute für Umwelt-, Sicherheits- und Energietechnik. "In the established markets, for example in Germany, Italy and Austria, the most favorable locations will gradually all be developed," explained Mathias Zuber of ecoprog. "For this reason there will be a slight fall in the number of new plants being installed. Some of this downturn can be compensated for by secondary investment in older installations – what´s known as repowering."

But outside Europe, too, biogas is gaining ground. Mexico is a good example: Over the last four years the government of this Central American country invested the equivalent of 17.7 million euros in the form of subsidies for the installation of 305 biogas plants. According to the German economic promotion organization Germany Trade & Invest, by next year the number of plants will have doubled. The Mexican Ministry of Agriculture is making around 33 million euros of funding available for this.

Israel, too, is pushing ahead with renewable energy. The national electricity supervisory authority is planning by 2017 to authorize anaerobic biogas plants with an installed total capacity of 160 MW. Investors, who succeed in getting an electricity-generation license, will be granted a feed-in tariff of initially 12 euro cents per kilowatt-hour for a period of 20 years. The tariff will be updated each year during the license period.

The increasing industrialization of the agricultural sector in many developing and emerging countries also opens up promising opportunities for the biogas sector. In order to integrate the private sector more in the setting up and expansion of sustainable energy systems in the partner countries in which Germany is engaged in development initiatives, the trade association Fachverband Biogas and the development organization Deutsche Gesellschaft für International Zusammenarbeit signed a cooperation agreement in January this year. "German technology leaders are an engine for setting up modern, future-capable energy systems in developing and emerging countries, and also at the same time opening up new markets there. This cooperation agreement will ensure that the developing countries, too, will benefit from the latest experiences on the German biogas market," emphasized Dr Claudius da Costa Gomez, Managing Director of Fachverband Biogas.

"In view of the large quantities of water needed for agricultural production of food, great potential is seen in the reuse of wastewater for irrigation purposes," says Prof. Dr.-Ing. Peter Cornel from the Wastewater Technology Department at the Technical University of Darmstadt. In arid and semi-arid regions, it is common practice. The International Waste Water Management Institute (IWMI, Sri Lanka) found three years ago that of the 53 cities in Latin America, the Middle East, Africa and Asia it investigated, around 80 percent were using part- or non-treated water in agriculture.

Example Jordan: The population here is rising fast, and water resources are becoming ever scarcer. Overuse of groundwater resources has already led to a drastic fall in the water table. A project funded by the KfW Entwicklungsbank uses treated municipal effluent from three treatment plants in the Irbid region for irrigation purposes. In addition it is planned to lay pipelines through into the northern Jordan valley, where the water will be further processed for use in agriculture. By substituting treated wastewater for fresh water in irrigation processes, every inhabitant of Jordan´s capital city Amman will have an additional 20 litres of drinking water available to them each day. The farmers benefit from the fertilizing properties of the nitrogen and phosphorous content in the treated water. The German international project-development organization Deutsche Gesellschaft für International Zusammenarbeit (GIZ, Bonn) has already begun consultations in the central Jordan valley on adapting the use of fertilizers. Another advantage of the overall concept is that the substantial difference in altitude between the location of the treatment plants near Irbid and the Jordan valley is to be exploited by constructing a power station to utilizing the transport of the treated effluent for generating electricity for up to 15,000 households.

Another example is Peru: At the end of 2009 SEDAPAL, the water resources agency for Lima started up a treatment plant near the Peruvian capital to process effluent into water specifically for irrigating over 400 hectares of arable land. The concept and the components for the system were delivered by the international water and wastewater specialists ITT. This involves employing a sequence batch reactor (SBR) with tertiary filtration which reliably removes the parasite Helminth Ova, which is resistant to standard disinfectant technologies. The treated water produced by this facility meets the requirements for agricultural irrigation laid down by Peru's government in 2008.

A third example is China: Here ttz Bremerhaven is currently developing a new irrigation technique for energy wood plantations, in cooperation with Alensys AG of Erkner, Germany, and Hydro-Air GmbH (Niedergörsdorf, Germany). In this BIOWARE project, sponsored by the German Ministry of Economics, municipal wastewater and ground water are mixed to produce a suitable nutrient solution. When this water is delivered via a controlled system of drip irrigation, savings can be made in terms of both cost and conventional fertilizers. In spring this year the prototype for this wastewater recycling system is being installed in Yangjiteng, a small town near Chengdu with around 20,000 inhabitants.

In addition to these centralized, large-scale treatment concepts, there is also the possibility of processing wastewater for irrigation decentrally, in much smaller units. In Indonesia for example, high water prices and the need to irrigate several parks prompted the operators of one hotel on the island of Sumatra to install a membrane bioreactor system in 2008. The technology for this, from Hans Huber AG of Berching (Germany), is housed in one of the lower floors of the hotel. Each day this plant delivers around 250 cubic metres of water for use in irrigating the landscaped gardens.

At the BASF booth a large selection of innovative and sustainable system solutions for the wide range of uses awaits the trade visitor. BASF’s extensive range of established products, such as flocculants, coagulants, corrosion inhibitors, antiscalants, biocides, chelating agents and defoamers, provides tailor-made solutions for the treatment of waste water, drinking water and industrial water. This year’s main focus at IFAT is ultrafiltration technology, a field of activity that BASF is strengthening since the acquisition of inge GmbH in 2011.

The German company inge GmbH – widely regarded as the global leader in the field of ultrafiltration technology – hundred percent owned by BASF and part of its Water Solutions business – features the highly-efficient and robust ultrafiltration membranes as well as the space-saving rack designs used to treat drinking water, process water, waste water and sea water. The extremely small-pore filters of the Multibore® membrane reliably intercept not only particles, but also microorganisms such as bacteria and viruses, thereby providing a dependable source of clean water.

InnoWa Membrane GmbH specializes in the development, application, and manufacture of high-performance filter systems based on membrane technology. The company emerged from the former EBG GmbH and employs currently 20 people who will be employed by MAHLE. In future, InnoWa Membrane GmbH will operate under the name MAHLE InnoWa GmbH, headquartered in Stuttgart.

InnoWa Membrane manufactures hollow fiber membranes for ultrafiltration. Ultrafiltration is used, for example, as a process step in the treatment of drinking water from rivers, surface waters, or springs, and as a preliminary step in sea water desalination. This technology allows even minuscule particles such as germs, viruses, and bacteria to be filtered, opening up additional areas of application in home and building services engineering, for example.

With its Industrial Filtration division, MAHLE Industry is already an established manufacturer of filtration solutions for a broad spectrum of industrial applications. “By acquiring InnoWa Membrane, we are opening up new areas of application for our company in the field of filtration, such as the increasingly important segment of water treatment,” says Dr. Michael Matros, Corporate Executive Vice President and General Manager of MAHLE Industry. “This acquisition also strengthens our core markets of Food & Beverage, Power Generation, and general industrial applications,” continues Dr. Matros.

Available in four new capacities, Osec B-Pak tubular cell electrolyzer systems from the Siemens Industry Automation Division extend the output range of the company's water disinfection portfolio. The largest model, the OSEC B-Pak 260 system, can produce up to five kilograms of chlorine per hour or 120 kilograms of chlorine per day. Producing the sodium hypochlorite as-needed and on-site eliminates the dangers involved in storing and transporting chlorine gas or commercially available sodium hypochlorite solution. As it is also cheaper to operate an OSEC B-Pak system than to buy sodium hypochlorite, the initial capital cost pays off quickly.

The newly developed systems are compact and mounted on a skid to save space, easy to operate, and designed for a long service life. The core component is a newly designed, especially robust electrolyzer cell in a clear acrylic enclosure that produces a stable disinfectant solution. The low-concentration solution minimizes corrosion and degradation - loss of available chlorine during storage - which occurs with highly concentrated solutions containing 10 to 15 percent sodium hypochlorite. Operational safety is enhanced thanks to the fully automated control system. Components are readily accessible and easy to clean. The systems are supplied completely pre-assembled, electrically connected and tested, and can be quickly installed and commissioned on-site.

Memthane® opens the door to treating high strength, high solid wastes found in industries such as distilleries, dairies (whey), bio-ethanol producers and instant coffee plants which were previously considered untreatable from an economic standpoint. Memthane® is not just an Anaerobic MBR technology, but a small footprint solution that offers an array of benefits, eliminating disposal costs while generating valuable biogas and remaining easy to operate and maintain.

Memthane® maximizes renewable energy production while producing high quality effluent that can be discharged directly to the sewer or often easily reused. The suspended free effluent can also facilitate easy recovery of nutrients for fertilizer production. With a COD removal efficiency of >98%, this powerful green energy source offers the possibility of making production plants energy self-sufficient, reducing the dependency on costly external fossil fuels.

Memthane® combines two technologies with proven track records: Biothane’s anaerobic biological wastewater treatment and Pentair X-Flow's ultrafiltration (UF) membrane separation process. Influent is fed to the anaerobic bioreactor where the organic components are converted into energy-rich biogas. Next, the anaerobic effluent is processed through the UF membrane unit, separating the ‘clean’ permeate from the biomass. The biomass is returned to the bioreactor, while the ultra-clean filtrate is discharged as particle-free, low BOD/COD effluent, often at levels low enough for direct discharge to the sewer.

In addition to its performance advantages, Memthane® delivers significant total operating costs reduction compared with other technologies, taking into account all elements, including membranes, chemicals, sludge disposal and overall energy savings. The simple, single, fully automated reactor system also offers the possibility of remote control.

At IFAT ENTSORGA 2012 in Munich, Seepex is presenting their innovation Smart Conveying Technology and demonstrating how to replace a progressive cavity pump rotor and stator in less than five minutes.

In recent years, the testing for heavy metals discharged from industrial sewage treatment plants and in surface water used for the preparation of drinking water has increasingly become the focus of official monitoring in many countries. Examples of this are the detection of chromium (VI) and total chromium in the leather and dyeing industry, the detection of copper and nickel in wastewater from galvanizing businesses, and the detection of iron, lead and manganese in the conditioning of drinking water. The operating companies are obliged to submit measurements to the responsible environmental authority as the controlling body on a continuous basis. It is therefore an advantage to determine this information online.

When choosing the appropriate measuring technology, it must be noted that Volta metric determination, as a conventional laboratory method, is not suitable for online measurement in process plants. It is sometimes necessary to spend considerable sums on this measuring equipment in order to ensure consistently reliable measuring results in quasi-continuous operation without the intervention of laboratory personnel.

A cost-effective alternative is provided by photometric detection methods, which enable heavy metals to be measured right down to trace level. With the PowerMon range of units, Bran+Luebbe online analysers from SPX provide an ideal platform for these measurements. Applications are available for the above-mentioned examples, among others, thanks to the flexible equipment options. Depending on the application, the verification limits lie in the range from 0.3 µg/l to 3 µg/l, which also makes the units outstandingly suitable for monitoring limits in drinking water.

For waste water and industrial applications Vogelsang is introducing a new rotary lobe pump concept. The pumps in the IQ series are characterized by their user-friendly construction. The pump chamber consists of a single central part and thus ensures low operating costs and cost-effective pumping of demanding media such as primary sludge or mechanically thickened sludge. This makes the IQ series particularly suitable for sewage treatment plants or for industrial applications. It provides high priming capacity, but at the same time it can be simply and quickly drained to the greatest extent possible. The number of relevant spare parts was reduced by half, so that the time needed for replacing wear parts has been significantly reduced. Since the pump chamber can be dismounted in a few easy steps, the pumping elements are easy to reach for service and maintenance work. What is also new is that to replace any wear part, from the pump chamber to the mechanical seal, no screws in the connection to the pipe must be loosened. The pump remains firmly screwed into the pipe.

AQUALOOP - new system for water treatment and grey water recycling
Whether surface water, groundwater, runoff water from wastewater treatment systems, industrial sewage or grey water from houses – AQUALOOP produces germ-free, bacteriological high drinking water quality!* The AQUALOOP system consists of a few modular components to fit any situation that can be easily assembled as required.

The patented AQUALOOP C-MEM membranes are at the core of the water treatment process. The membranes´ special hollow fibres reliably filter bacteria and virus.

Their special design and arrangement ensures a long service life of up to 10 years with minimal maintenance. AQUALOOP can recycle and improve water quality without chemical additives such as chlorine, which is proven hazardous to health.

Severn Trent Services is one of the world leaders in tertiary treatment technologies, with more than 300 systems installed worldwide including treatment of more than one million m3/d in Europe alone. The TETRA® DeepBed™ filtration system is a down flow sand filter for the filtration of effluent from municipal wastewater treatment plants. The technology offers process flexibility and high efficiency backwash for the removal of suspended solids and other insoluble contaminants. For nitrate-nitrogen and suspended solids removal, the process is easily upgraded to the TETRA® Denite® system, a fixed-film biological denitrification process. The Denite system integrates well with other plant treatment processes to provide superior total nitrogen and phosphorous removal. TETRA Denite and TETRA DeepBed filters represent more than 10 percent of the world’s capacity for wastewater reuse systems including more than 40 percent of all installations in Florida, USA.

The TETRA® NSAF (nitrifying submerged aerated filter) is a tertiary ammonia removal process for municipal and industrial wastewaters. The TETRA NSAF is available in a range of sizes from small modular units for above ground construction to large bespoke design plants. All sizes of NSAF are capable of achieving low Ammonia standards.

Severn Trent Services is a leading supplier of electrochlorination technology. Since 1988 the company has installed more than 3,500 ClorTec® on-site sodium hypochlorite generating systems worldwide, and the systems have been used for water reclamation / reuse applications in water-starved regions of the world. Severn Trent Services also has developed a cost-effective system for the on-site production of sodium hypochlorite for use in swimming pools, cooling towers and food and drink applications – the ClorTec SCT mini on-site sodium hypochlorite generating system. This compact, innovative product offers a safe and reliable alternative to the transportation of hazardous chemicals and is easy to maintain.

The Multiparameter Bench Photometer HI 83099-02 from HANNA instruments is perfectly suitable for wastewater analysis.

In addition to COD at three levels, HI 83099-02 measures further 43 water quality parameters like ammonia, nitrite, nitrate, dissolved oxygen or phosphate. COD measurements are performed easily, quickly and safely according to the micromethod.

The meter features a large grafic display with contextual help and a tutorial mode that assists the user during each step of the analysis process. Over 200 measurements can be logged on demand and transferred to a PC via USB.

Allweiler
(Bottrop) Allweiler GmbH will exhibit its new All-Optiflow pump series. These new progressing cavity pumps are designed for use in waste handling, wastewater treatment, and paper manufacturing, among other applications. All-Optiflow progressing cavity pumps generate pressure of up to 6 bar (87 psi) to move virtually any type of liquid (even with fibrous and solid materials) efficiently and reliably. Their capacity can be up to twice as high as conventional pumps.

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.

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.

Next year sales of treatment chemicals for water and wastewater applications will rise by $1 billion to $24.7 billion. This forecast is in constant 2010 dollars. When inflation since 2010 is taken into account, the market at actual 2013 prices will be $27 billion.

Industry	2013



Chemical	788
Electronics	418
Food	764
Metals	818
Mining	454
Oil & Gas	1,075
Other Industries	1,284
Pharmaceutical	343
Power	4,851
Pulp & Paper	1,835
Refining	2,693
Wastewater	4,596
Water	4,875
Total	24,794

Asia will account for the majority of the increase. This is due to expansion of power generation, municipal wastewater treatment and municipal water treatment in Asia. The power industry in Asia will spend $2.4 billion for treatment chemicals. In 2013, China, India, Vietnam and other developing Asian countries are greatly increasing their coal generation capacity.

A unique segment of the Asian power market is the cleanup of the Fukishima power plant. This one plant will account for 4 percent of all the purchases of treatment chemicals by the Asian power industry in 2013.

Due to the poor quality of source water, the chemical requirements to purify drinking water in Asia are higher than in other areas. Due to the water shortages, there are increasing quantities of treatment chemicals utilized to purify municipal and industrial wastewater for re-use.

China will be increasing expenditures for chemicals used in conjunction with desalination. By contrast the Middle East will not see the double-digit growth next year which it has experienced in the past.

Headlines for the April North America Municipal Wastewater Treatment Facilities and People:

Wapato’s WWTP Cited for Exceeding Ammonia Levels and Operating without a Water Discharge Permit

Rentricity Awarded NYSERDA Funding to Develop Wastewater Energy Recovery Designs for NYCDEP Facilities

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