WELCOME
Weekly selected highlights in flow control, treatment and combustion from the
many McIlvaine publications.
• Briefs
• Coal Fired Boiler Component Market is Large and Slowly Growing
• The DowDupont recommendations for Advanced Manufacturing and McIlvaine
thoughts on IIoT and IIoW
Briefs
Coal Fired Boiler IIoT and Market Webinar on April 25: You can see from the
analysis below that the combust, flow and treat market for coal fired boilers is
very slow growing but is very large. International component suppliers can
penetrate the Asian Market. To find out how just register at
Click here to Register for the Webinars
Municipal Wastewater: The webinar last week covered the growing Asian market for
Combust, Flow & Treat (CFT) products but also documented the large replacement
market in the U.S. and Europe. In the future large operators, consultants, and
system suppliers will make most of the CFT purchasing decisions. You can view
the webinar at https://youtu.be/Yl_AGdDWbr0 . You can also subscribe for 3
months at no change to:
Municipal Wastewater Decisions
Forecasting Purchases of CFT Equipment for each Large Chemical Producer: Unlike
coal fired power or municipal wastewater where one plant is similar to another
chemical plants differ greatly. The best way to obtain accurate forecasts is to
create factors that can be applied to production capacity. The problem with a
company such as BASF is that there are many different products being produced.
This necessitates separate forecasts for MDI, chlorine and other products. It
took a Power point presentation with 118 slides just to create the foundation
from which each specific product can be analyzed and forecasts determined. For
more information on this initiative Click Here.
Coal Fired Boiler Component Market is Large and Slowly Growing
The market for combust, flow and treat (CFT) products for coal fired boilers is
large and not shrinking. It is larger than represented in many reports.
Forecasts for purchases of each type of product is made possible by detailed
analysis of the MW of capacity and each specific variable impacting the market
for a product. In the past the change in capacity has been overshadowed by new
environmental regulations. Over the last 40 years there has been wave after wave
of investment as one region after another adopted air and water pollution
emission limits. There is still a wave in the ASEAN nations and India, but this
wave is overshadowed by the 2000 GW of environmental equipment which needs to be
constantly repaired and replaced.
The starting point to determine the market for CFT products is the installed
generation capacities. The difference in installed capacity from one year to the
next equals new builds less retirements. Pumps, valves, nozzles, blowers and
similar components need to be replaced every 10-15 years. So, unless the growth
rate is higher than 6%/yr to 10%/yr the replacement market will be larger than
the new market. In a high growth country such as India the new build expenditure
will be greater than the replacement, but the total investment will still be
small compared to that in a country such as China with 1000 GW of coal fired
capacity. The compound annual growth rate (CAGR) for installed capacity ranges
from 7% in West Asia to a negative 5% in NAFTA. In two regions capacity will be
shrinking. But the component market will be substantial even if it is being
reduced by 2-3% per year.
(Megawatts)
World Coal Fired Capacity
Region CAGR %
Total 1
Africa 4
CIS 2
East Asia 3
Eastern Europe 2
Middle East 2
NAFTA (5)
South & Central America 0
West Asia 7
Western Europe (2)
The result will be a very large but mature market for CFT components. This
contrasts to the market for new coal fired boilers and environmental control
systems which will be much lower than in the past. Consider the market in 1974
in the U.S. OPEC cut off oil to the U.S. Utilities panicked and ordered 70,000
MW of new coal fired boilers within a few months. From 1974 to 2018 less than
70,000 MW of new capacity was actually installed in the U.S. So, the order rate
has been negative for the last 44 years. China has initiated FGD and SCR
programs which in just a few years resulted in 400,000 MW of environmental
retrofits.
Those days are gone. Not only have these big sudden markets disappeared but the
technology has become standardized. This means that Indian and Chinese companies
are supplying systems at prices which exclude international competition. The
same is not necessarily true of components. There could be some system
exceptions. The problem is that the international system suppliers do not have
the profits to reinvest in R&D.
Let's take rare earth extraction as an example. The Philadelphia Electric MgO
FGD system coincidently makes a perfect rare earths feed stock in the HCl/particulate
scrubber. DOE and the Chinese government are pursuing the expensive micronizing
of fly ash landfills rather than the much more cost effective in situ approach,
but no vendor is attempting to leverage this very big potential.
HCl Scrubbing and Rare Earth Recovery from Coal-Fired Power Plants and Gasifiers
are the Perfect Marriage
It is possible to greatly improve the accuracy of market forecasts for
components by obtaining accurate capacity forecasts and then to relate the
investment for each component as a function of capacity. The following segments
need to be considered. Incremental new systems, new systems which replace
retired systems, replacement components, repair and service of existing
components.
Over the life of the average pump, blower or high-performance valve the cost of
repair will exceed the original cost. As a result, the largest markets for
component suppliers are at existing plants in countries with a large installed
base.
The movement to IIoT and Remote O&M adds the potential to expand the service and
advisory opportunity and to negotiate yearly contracts which can be fixed price
or on a partnership basis where the owner and supplier share the savings.
Since owners will be armed with total cost of ownership data due to IIoT and
data analytics, the supplier will want to spend the time to prepare a total cost
of ownership evaluation. If this is not the lowest then he will need to invest
in R&D and be able to submit the Lowest Total Cost of Ownership Validation
(LTCOV).
It is highly desirable and possible to forecast the purchases for the few
hundred enterprises which buy or influence the majority of the component
purchases. Let's use FGD components as an example.
FGD Example: FGD consumables include lime, limestone, water treatment chemicals,
filtration cartridges and belts, membranes, dust bags, seals, balls for ball
mills, general performance analyzers and similar items. Minor replacements
include nozzles, valves, general performance pumps and mist eliminators. Repairs
are needed for high performance pumps, dampers, high performance valves,
scrubber linings, continuous emissions monitoring systems, fans and
high-performance analyzers.
Many FGD systems in the U.S., Japan and Europe were installed in the 1980s.
These systems are being updated with extensive automation and in some cases new
scrubber vessels. New pumps and fans are also being installed. In part this is
due to end of life issues but often upgrades are required to meet tougher
regulations.
The yearly FGD capacity additions have peaked both quantitatively and in terms
of percent increases. In the 1980s the new yearly additions were 20,000 MW per
year but in the early 1980s this represented as much as 20 percent of the
installed capacity. At the peak in 2005 the yearly additions were 90,000 MW but
only represented 10 percent of the total installed capacity. Now orders for new
systems have dropped to 60,000 MW per year but this represents only 4 percent of
the installed capacity.
What this means is a big change in the ratio between markets for new systems and
the purchases for existing systems. The market for new systems in 2018 will only
be $3 billion while the purchases for existing systems will be $16 billion. Most
of the new purchases will be in a few Asian countries. The total $19 billion
market will be dominated by relatively few end users and suppliers according to
the latest forecast in
N027 FGD Market and Strategies.
FGD System, Component, Consumables and Repair Purchases in 2018
Company Country Rank % of Total Coal-fired FGD Purchases in 2018 FGD Purchases
($ millions)
AEP U.S. 9 1.1 209
BWE U.S. 14 0.6 114
Datang China 3 7 1,330
Duke U.S. 10 1 190
Enel Italy 13 1 190
Eskom South Africa 5 6 1,140
Guodian China 2 7.5 1,425
Huaneng China 1 9 1,710
Huadian China 6 6 1,140
J-Power Japan 16 0.5 95
National Thermal Power Corporation (NTPC) India 4 7 1,330
NRG U.S. 11 1 190
Shenhua China 7 4.5 855
Southern U.S. 12 1 190
Uniper Germany 15 0.6 114
Vietnam Power (EVN) Vietnam 8 2 380
Sub Total 55.8 10,602
Other 44.2 8,398
TOTAL 19,000
Many of the decisions are increasingly being made by OEMS and EPCs. Let's take
the example of flow control components such as pumps, valves, fans and dampers.
For new systems the end user will not often directly purchase these components.
Large FGD system suppliers will typically purchase or specify the specific brand
and product.
FGD system suppliers are making a big effort to serve their existing customers
with O&M services which include component replacement. In the future third party
O&M will become commonplace as explained in
N031 Industrial IoT and Remote O&M.
The remote monitoring of every valve, pump, fan and damper will generate unique
knowledge for the corporate utility personnel and OEMs. As a result, a few
thousand people in 31 corporations will make more than 70 percent of the
purchase decisions for high performance FGD components.
Decision Makers for High Performance FGD Components Percent
Top 16 operators - Direct 40
Top 16 EPCs and OEMs for the top 16 operators 12
Smaller EPCS for top 16 operators 3.8
Top 16 operators sub total 55.8
Top 16 EPC's for smaller operators 15
Top 31 sub total 70.8
Purchases by smaller EPCs for smaller operators 9
Smaller operators - Direct 20.2
Total 100
The market report provides forecasted purchases by each of the large operators
and OEMS. Detailed profiles of the FGD OEMS are also provided. Detailed profiles
of the operators are found in 42EI Utility Tracking System which also tracks
individual projects on a weekly basis.
For more information click on the markets click on N027 FGD Market and
Strategies or contact
Bob McIlvaine at rmcilvaine@mcilvainecompany.com 847-784-0012 ext. 112
The DowDupont recommendations for Advanced Manufacturing and McIlvaine thoughts
on IIoT and IIoW
Andrew Liveris is the executive chairman of DowDuPont, a $73 billion holding
company (the two giant chemical companies merged in September). Mr. Liveris will
relinquish the role of executive chairman of the combined company April 1.
Co-lead director Jeff Fettig will assume that role at the company.
The McIlvaine Company has consulted for Dupont and Dow periodically over the
entire 44 years since incorporation. Some of the consulting has been technical
including provision of a test scrubber to better measure performance. Marketing
advice has been provided for RO membranes, Teflon gloves, Tyvek garments, the
larger water market and the potential for amine scrubbing and sulfuric acid
production for the power industry. One assignment relative to water markets
addressed the Dow U.S. vs. international capability. Therefore, we read with
interest the recent comments of Mr. Liveris on this subject.
Liveris is the author of Make It in America: The Case for Reinventing the
Economy, in which he writes that America's economic growth and prosperity
depends upon a strong manufacturing sector. According to Liveris, there is a
widespread lack of understanding among the public of what today's manufacturing
- which he referred to as advanced manufacturing - actually consists of.
(Definitions vary, but the OECD defines advanced manufacturing technology as
computer-controlled or micro-electronics-based equipment used to make products.)
Liveris stated, "We are generating a new wave of technology to generate a
knowledge economy. And a knowledge economy will need things made. They'll just
be made differently."
Advanced manufacturing might include making smartphones, solar cells for roofs,
batteries for hybrid cars, or innovative wind turbines. Liveris said he had
visited a DowDuPont factory the previous week that is working on advanced
compasses to enable wind turbines with blades the size of football fields. The
goal is to produce blades light and efficient enough to make wind power a viable
reality. "That's technology. That's advanced manufacturing," he said.
Liveris said that 7.5 million technology jobs left America between 2008 and 2016
because the country wasn't supplying appropriate candidates. The reaction of
many businesses was to re-locate to "the Chinas, the Indias, and the places that
were supplying that sort of skill." In the United States right now, he said,
there are half a million technology jobs open, but American educational
institutions are only graduating roughly between 50,000 and 70,000 candidates
per year, so there's a "massive under-supply." In the next three years, there
will be 3.5 million jobs created, and Liveris said the U.S. might only be able
to fill about 1.5 million of them through a combination of graduation and
immigration. "Unless immigration is fooled with, which is a whole other issue."
According to Liveris, a critical reason for America to revive its manufacturing
sector is to promote innovation. "Something that we at Dow and many of us in
manufacturing know: If you have the shop floor, if you make things, you have the
prototype for the next thing, so you can innovate." Conversely, if you stop
making those things, your R&D diminishes dramatically, he said.
Liveris called advanced manufacturing "the best path for the United States" and
said, "We're so naturally suited for it if we'd just get the policies to help
us."
A big proponent of STEM education, Liveris said that American schools are not
graduating the workers we need. "We have convinced ourselves that a four-year
college degree of the skills we used to have in the last century is what we
should still keep producing." He said that re-tooling American education needs
to happen immediately, with STEM education incorporated at every level including
elementary school. STEM is a curriculum based on the idea of educating students
in four specific disciplines - science, technology, engineering and mathematics
- in an interdisciplinary and applied approach.
Why the Industrial Internet of Wisdom should be a major factor in STEM and
advanced manufacturing.
During much of the period when McIlvaine was consulting for Dow Midland there
were accelerated retirements and other methods to cope with the shift of a good
percentage of production to overseas locations. The retiring people typically
were the most experienced.
The concept of the Internet of Wisdom to empower IIoT includes connecting
knowledge and people. It involves knowledge systems led by not just subject
matter experts (SMEs) but subject matter ultra-experts who continually learn as
they help improve the decision systems and guide the users. In this manner you
retain the services of the senior people and with the construction of the
decision system ensure that their knowledge will not be lost.
The McIlvaine IIoT and Remote O&M service champions the use of SMUEs to be a
third-tier source of wisdom in the monitoring of all the combust, flow and treat
components. They are available in crises and through cloud access can be
instantly provided with necessary details. Their work on the decision systems
will result in guidance by the operators in the developing countries and ensure
that the crises are kept to a minimum.
Mr. Liveris makes a very good point about building advanced manufacturing in the
U.S. However, the more basic products made by Dow/Dupont need to be produced
near to the end markets. The development of Dow subject matter experts and
decision systems will generate a number of high level jobs in the U.S. This can
be in addition to the STEM-trained personnel who will be working in advanced
manufacturing. Many aspects of the more basic STEM program can also be enhanced
by some access to the decision systems.