September 2015 - Power Air Quality Insights 223

$60 Billion O&M and Upgrade Opportunity for U.S. Fossil and Nuclear Power Plant Suppliers

The outsourcing option is increasingly appealing to power plants around the world. This represents a total available market (TAM) of more than $200 billion/yr. and a serviceable addressable market of over $60 billion. This is the conclusion reached in N043 Fossil and Nuclear Power Generation: World Analysis and Forecast published by the McIlvaine Company. (www.mcilvainecompany.com)

The U.S. potential is evenly split between upgrades and retrofits. Each has an annual potential of $30 billion. The upgrade potential is driven by regulations and politics. The prohibition on new coal–fired power plants dictates upgrading the existing ones. Life extension for nuclear plants is another driver.

Relative to O&M the largest potential in the U.S. is in the nuclear segment with a TAM of $15.8 billion.

Coal-fired boilers represent an O&M TAM of $10.6 billon. Outsourcing of environmental and non-process functions is the easiest to justify. The outsourcing intensity can range from just utilizing one source to supply all the plant filters to a holistic contract to operate and maintain environmental facilities to meet all applicable regulations.

Babcock & Wilcox (B&W) is a good example of a company which has positioned itself to take advantage of this trend. It purchased a precipitator upgrade division from GE. It also acquired a continuous emissions monitoring company. CEMs measure key parameters of an operation. The Total Solutions provider can leverage remote monitoring to help operate the plant. CEMs also need regular servicing. So this provides an additional reason for continuing activity at the plant.

B&W is one of the largest suppliers of wet flue gas desulfurization systems. It entered the dry scrubbing business decades ago with the purchase of the Joy-Niro technology. Because of its O&M activities relative to boilers, it is well entrenched at many power plants. In the past system suppliers have failed to capture the market for replacement FGD nozzles, dust collector bags and other consumables.

One of the biggest markets is the supply of reagents. B&W has its toe in the water with the supply of chemicals to prevent mercury re-emission from the boiler. There is a very good justification for a Total Solutions approach to this effort. The effectiveness of the chemical is linked to the amount of chloride bleed from the system. The amount of bleed liquor affects pumps, scrubbers, clarification of wastewater and many other aspects which are best understood by a Total Solutions provider.

Nuclear and gas turbine O&M lends itself to Total Solutions to the same extent as coal-fired power plants. In some ways the air and water treatment is more critical. With gas turbines the performance of the intake filters to the turbine affects the combustion efficiency. The name Fukushima suffices to explain the importance of water treatment in the nuclear industry.

A huge but declining air pollution control (APC) market in China will create a tsunami which will exceed the Japanese and European APC tsunamis of previous decades. This is the prediction of McIlvaine Company in Air Pollution Management. (www.mcilvainecompany.com)

What is an APC tsunami and what is its cause? The tsunami is the sudden appearance of many new foreign players in a domestic market. The cause is that national regulations create temporary large markets. When these markets slow, the suppliers look elsewhere to sell their products.

The U.S. has experienced two such events. Flue gas desulfurization (FGD) was developed in the U.S. and applied to 10 percent of the 300,000 MW coal-fired base in the 1975 timeframe. Japan then decided to install FGD immediately on all its 30,000 MW of coal-fired capacity. So it was the world’s largest market for several years. Mitsubishi, Chiyoda and Hitachi all entered the market. When the Japanese market subsided, they started pursuing the U.S. market and over the years became major suppliers.

The world precipitator market was dominated by two U.S. companies: Research Cottrell (RC) and Western Precipitation (WP). As a result of European tsunami, they disappeared under the waves. Their demise was more than just the aggressive activity of European suppliers. Europe mandated continuous compliance for particulate control. No such requirements existed in the U.S. Flimsy wire rappers supplied by RC and WP would break and were no match for the rigid frame European design. Flӓkt (Sweden) very quickly became the top U.S. precipitator supplier.

The Japanese market for coal-fired boiler air pollution control is one tenth the size of the U.S. market. The European market is equal to the U.S. The Chinese market is four times the U.S. in the long term and twenty times the U.S. in the short term. So the Chinese tsunami potential is huge. The top ten air pollution control companies in China are all in the top twenty worldwide even though all their business is in China. The huge retrofit program has created an unsustainable bulge in the market. The economy is also slowing and there will be no more years with 100,000 MW of new coal-fired power plants.

Much of the Chinese technology was originally under license, but improvements to the technology have been made. One major supplier requires its engineering staff to spend 30 percent of its time on development of improved products. One example of an improved product is a hybrid precipitator-fabric filter licensed from U.S. DOE. The Chinese supplier has commercialized this with many successful installations. The U.S. Dry Fork power plant dry scrubbing system duplicates an installation in China.

The magnitude of the tsunami can be measured in SCR catalyst capacity. World demand in 2010 was 130,000 m³. Chinese SCR catalyst production was zero. Due to retrofits there was a Chinese need for as much as 200,000 m³ in just one year. China now is the world production leader. However, catalyst only needs to be replaced every six years, so China already has excess capacity. The situation relative to systems and components is even more calamitous. Systems last 25 years.

Coal-fired boilers are the largest application for air pollution control. Future new equipment markets are spread throughout the developing countries. However, there is a very large upgrade and maintenance market in the U.S. and Europe. The Chinese tsunami will necessarily be focused on the existing U.S. plants.

The worldwide APC new system capability already exceeds the needs over the next decade. On the other hand, the upgrade and maintenance demand is going to exceed supplier capability. Plant owners want to focus on their core business and would like to outsource as much of the air pollution control activities as possible. The result will be a Chinese Total Solutions tsunami which provides all upgrading, operations and maintenance needs.

World Market for Air and Water Monitoring to Rise to be $31 - $33 Billion in 2019 Depending on the Chinese Growth Rate

China will spend more than $1.7 billion for power plant air and water monitoring in 2015. This represents 40 percent of the world’s power plant air and water monitoring purchases. The total monitoring market for all industries will be $29 billion of which China represents 17 percent. China will be the leading continuous emissions monitoring purchaser in 2015 with forecasted purchases of $750 million. Residential/commercial HVAC air monitoring purchases in China will be $1.9 billion in 2015.

The uncertainty relative to future growth in the Chinese economy makes the prediction of the 2019 world market more difficult. At an economic growth rate of 7 percent in China, the world market in 2019 will be $33 billion.

At 7 percent annual economic growth through 2019 continuous emission monitoring and residential HVAC expenditures will be at about the same level as in 2015. The reason is that 2015 revenues are at a high point and cannot be expected to keep increasing. At a 2 percent economic growth rate in China, there would be a substantial reduction in air and water monitoring purchases in that country. The result would be a world market in 2019 of only $31 billion.

McIlvaine is revising air and water monitoring forecasts quarterly in N031 Air and Water Monitoring: World Market. This example focused just on the Chinese economy could be misleading due to the fact that many variables have to be taken into account in each quarterly change. China is a leading purchaser but other trends could be more significant.

One of the significant variables is the price of oil. The oil and gas industry is a mid-range purchaser of air and water monitoring. These prices also indirectly impact other market segments. The political situation in Southern Europe, Russia and other countries is important and constantly changing.

San Diego Gas & Electric (SDG&E) hit a major milestone for renewable energy delivery in its service territory 12:51 p.m. Wednesday, August 19, 2015. SDG&E achieved a new record of 1,042 megawatts (MW) of renewable generation on its power grid.

"A combination of bright sunshine and strong wind conditions in the San Diego and Imperial Valley helped to generate the record-setting amount of green energy for our customers," said Scott Drury, chief energy supply officer for SDG&E. "We are proud to have delivered 33 percent renewable power over the last twelve months—the first utility in California to do so."

The 1,042 MW figure does not include the energy produced by 61,000 SDG&E rooftop solar customers.

The California Independent System Operator (CAISO) also reported a statewide record for renewable generation of 6,341 MW on August 19 at 1:42 p.m. — about an hour after SDG&E's record, eclipsing the previous all-time statewide peak of 6,330 MW set just a week earlier.

Expanding on one of America's largest renewable portfolios, Southern Company subsidiary Southern Power announced the acquisition of a controlling interest in the 200-megawatt (MW) Tranquility Solar Facility in California from Recurrent Energy, a subsidiary of Canadian Solar Inc. One of North America's largest solar developers, Recurrent Energy is constructing the facility and will retain the remaining interest in the project.

With one of America's most robust renewable generation portfolios, Southern Power has announced, acquired or is constructing more than 1,300 MW of renewable ownership with 19 solar, wind and biomass projects, including six solar projects in California. This facility adds further diversity and reliability to the Southern Company system's generation mix of nuclear, 21st century coal, natural gas, renewables and energy efficiency.

The project is being constructed on 1,900 acres of land in Fresno County, California. Expected to create approximately 500 construction jobs, the facility will consist of more than 800,000 polycrystalline photovoltaic solar modules, mounted on tracking tables.

Construction began in July, with Signal Energy Constructors managing the engineering, procurement and construction of the facility. The project is expected to enter commercial operation in the fourth quarter of 2016.

The electricity and associated renewable energy credits generated by the facility will be sold under a 15-year power purchase agreement with Southern California Edison.

Principal Solar Teams with Entropy to Build 100 MW Cumberland County, NC Generating Facility

Principal Solar, Inc., a solar power developer and operator, has agreed to terms to co-develop its first major solar asset with affiliates of Entropy Investment Management, LLC (Entropy). The 100 MW facility, located in Cumberland County, NC, will produce enough electricity to power approximately 20,000 average American homes.

Construction began the week of August 17, 2015, and the project is expected to begin generating power before the end of 2015. In the transaction, PSI will continue to play an important role in completing the project’s development phase and sold its interest in the project to affiliates of Entropy.

New Waste to Energy Facility will Provide Multiple Benefits for East Tennessee

Sevier Solid Waste in Pigeon Forge, TN, has engaged PHG Energy (PHGE) to build a new biomass gasification plant capable of cleanly converting more than 30 tons of composted material daily into thermal energy while producing a valuable high-carbon biochar.

"This new installation will help us reduce the amount of compost we need to transport by converting it into a biochar material, creating a new revenue stream for us," said Tom Leonard, director of Sevier Solid Waste, Inc. (SSWI). "The energy from the gasification system will be used in a thermal oxidizer promoting odor control in the buildings and will allow us to defer other upgrades. This represents a significant savings from our current disposal and operating costs."

PHGE's gasification plants employ a thermo-chemical process that cleanly converts biomass to a combustible fuel gas. Around 90 percent of the biomass that is gasified in the PHGE system becomes fuel gas, and the only remaining residue is the charcoal-like biochar, that in SSWI's case will be sold to a local industrial user as a renewable source of fuel to displace coal consumption.

The cost of the Pigeon Forge facility is $2.25 million. The project has been awarded a $250,000 Clean Energy Tennessee Grant through the Tennessee Department of Environment and Conservation (TDEC). PHG Energy will provide the gasifier, thermal oxidizer, material handling equipment and build the facility as general contractor.

Wave energy developer Eco Wave Power has announced that it has successfully closed the first round of fundraising led by Pirveli Ventures. Following the investment, a partner of the investment fund will join Eco Wave Power's board of directors.

This news follows the announcement made last month that a "Second Generation" power station has been successfully deployed by Eco Wave Power at Jaffa Port, Israel.

EWP has already demonstrated that it can produce electricity on a commercial scale during onshore testing at Jaffa Port, and holds 111 MW projects pipe-line. The total funding requirement for the execution of the whole pipe-line is around $150 million in different locations around the globe, which will be raised in stages.

In the meantime, EWP expects to have a fully commissioned commercially available wave farm in place by the end of 2015, which will start by selling electricity to the low voltage grid and expand to eventually producing up to 15 percent of all of Gibraltar's electricity.

”Power Plant Pumps” is the Hot Topic Hour on September 10, 2015 at 10:00 a.m. CST

A webinar on September 10 at 10:00 a.m. central time will cover the options and issues regarding selection of fossil-fired power plant pumps. There is a very ambitious goal to provide a website with the most comprehensive information on power plant pumps. This is part of a whole knowledge system to provide Alerts, Answers, Analysis and Advancement in every aspect of power. Owners and operators around the world have free access to 44I Power Plant Air Quality Decisions (Power Plant Decisions Orchard) and 59D Gas Turbine and Combined Cycle Decisions. The Power Plant Pumps Decision Guide is one of the subsidiary websites in both these knowledge systems.

This webinar will be focused on creating a Power Plant Pump Route Map and Summary which will help decision makers navigate the website. The first inputs to this Route map are displayed at Power Plant Pumps Route Map.

Jose Gutierrez, Director/Business Development, ITT Corporation & Xylem/ Goulds Vertical Products

Kei Koeda, Manager, International Sales & Marketing, Hydraulic & Energy Business Group, Business Division, Energy & Environment, Mitsubishi Heavy Industries, Ltd.

Jason M. Hoover, Leader – Medium Voltage Drives, USA, Siemens Large Drives

Allen Daniszewski, National Sales Manager – Industrial Products, SPX Process Equipment –Delavan Operations

The website already exists but there is conflicting information. For example, the introduction of ceramic impellers for FGD slurries needs to be more closely examined. These more detailed subjects will be pursued with continuing correspondence and future webinars.

McIlvaine webinars offer the opportunity to view the latest presentations and join discussions while sitting at your desk. Hot Topic Hours cater to the end users as well as suppliers while the Market Updates cater to the suppliers and investors. Since McIlvaine records and provides streaming media access to these webinars there is a treasure trove of value only a click away. McIlvaine webinars are free to certain McIlvaine service subscribers. There is a charge for others. Hot Topic Hours are free to owner/operators. Sponsored webinars provide insights to particular products and services. They are free. Recordings can be immediately viewed from the list provided below.

DATE	UPCOMING HOT TOPIC HOUR	UPCOMING MARKET UPDATES
September 10, 2015	Power Plant Pumps A decision guide for pump selection for intake, cooling, ultrapure water, steam and wastewater from coal and gas turbine power plants. More information Click here to register
September 11, 2015		Valve Market Forecast Changes The oil prices and Chinese economy will be two of the drivers evaluated as the basis for adjustments in the 2016-21 forecasts for industrial valves. More information Click here to register
September 24, 2015	Power Plant Water Monitoring A decision guide for selection of monitoring equipment for intake water, cooling, ultrapure water steam and wastewater from coal and gas turbine power plants. More information Click here to register
September 25, 2015		Pump Market Forecast Changes The oil prices and Chinese economy will be two of the drivers evaluated as the basis for adjustments in the 2016-21 forecasts for pumps. More information Click here to register
October 1, 2015	Power Plant Water Treatment Chemicals A decision guide for selection of chemicals to treat intake water, cooling, ultrapure water steam and wastewater form coal and gas turbine power plants. Click here to register
October 2, 2015		Fabric Filter Market Forecast Changes New technology such as ceramic catalytic filter elements, the Chinese economic slowdown, oil prices and other factors will be explained in terms of their impact on the 2015-21 market for fabric filters, bags, media and fibers. Click here to register
October 22, 2015	Precipitator Improvements Decision guide to dry, hybrid and wet electrostatic precipitators for solid fuel combustion, refining and other industries. Focus will be on improvements to the electricals and components. Click here to register
November 12, 2015	Dry Scrubbing Expansion of the dry scrubber decision guide for power plants, incinerators, and other applications involving SDA, CFB and DSI. Click here to register
December 3, 2015	NO_x Reduction Decision guide to selection of SCR and SCR systems, ammonia injection, reagents, catalysts for power plants refineries, incinerators, chemical plants and other applications. Click here to register