January 2017 - Water - Wastewater Treatment Chemicals Insights 73

Connecting Things, People, Intelligence, Niche Experts and Wise Crowds for Power Industry Decisions

GE, Emerson, Siemens and many other companies are creating software to connect things. There is a large potential for this in power generation. This potential was reflected in a number of papers and displays at the recent PowerGen Asia exhibition.

“We believe the success of our power generation customers will be more and more supported by the intelligent use of data generated by ever increasing connectivity of devices. The integration of those data with people expertise and knowledge will create additional services in a cycle delivering unprecedented knowledge of the behavior and potential of their assets,” said Marco Sanguineti, Head of Technology for ABB’s Power Generation business unit.

McIlvaine recently conducted nine hours of webinars focused on a problem for one utility. Presentations by Siemens, GE and Emerson addressed the optimization route to a lowest total cost of ownership (TCO) solution but the participants (wise crowd) concluded that incorporating innovative new technologies and components would be equally important in a system which would provide the lowest TCO.

Companies such as ABB are integrating the data from many thousands of sensors which are monitoring thousands of pumps, valves, mixers, fans, compressors, burners, conveyors, filters, etc. In a large utility with multiple plants, there are hundreds of individuals with specialized knowledge that may be valuable in a specific lowest TCO determination. As a result, there are likely to be many thousands of people who can contribute to the decision-making process. How do you take advantage of all this niche expertise?

Jeff Immelt of GE observed that the power industry needs to adopt the “hurry up” attitude of Silicon Valley in developing new technology. McIlvaine believes that this “hurry up” mode can best be achieved by decision systems which interconnect machines with people, intelligent databases and systems, niche experts and wise crowds. Systems have been created which provide the four knowledge needs: Alerts, Answers, Analysis and Advancement. The newest addition has been to supplement periodic webinars with very focused LinkedIn discussion groups. These groups facilitate “wise crowd” decisions by addressing all the criteria needed for a “wise crowd” to function properly.

Criteria	Description	LinkedIn role
Diversity of Opinion	Each person should have private information.	Small LinkedIn discussion groups lend themselves to extracting the niche expertise and unique ideas.
Independence	People's opinions aren't determined by the opinions of those around them.	The small LinkedIn discussion groups are not subject to the peer pressure of the large webinars. McIlvaine editors then integrate the conclusions reached in the discussion groups.
Decentralization	People can specialize and draw on local knowledge.	The small LinkedIn discussion group is the ideal way to extract the local knowledge and benefit from niche expert participation.
Aggregation	Some mechanism exists for turning private judgments into a collective decision.	The LinkedIn discussion groups are a bridge between analyses and webinars which result in the collective decisions.

The LinkedIn discussion groups are an important part of the entire interconnection system between:

· The final interconnection between all the many individuals in each of the above

Supplier knowledge can be transmitted through individuals who are encouraged by management to focus on becoming more expert. These individuals will be “rainmakers.” If they demonstrate that their company has the knowledge and the products to provide the lowest TCO, they can be very effective in boosting sales.

The same is true of consulting companies. However, the challenge will be to offer just enough expertise to achieve the rainmaking without reducing the potential actual consulting revenues.

The expansion of municipal drinking and wastewater treatment in Asia is one of the driving forces which will ensure that growth in the water treatment chemicals market will exceed the rise in GDP. The 2017 market is forecast at $27 billion. This is the latest forecast in N026 Water and Wastewater Treatment Chemicals: World Market. Corrosion inhibitors will be the leading product segment.

Subject	2017
Total	27,585
Activated Carbon	772
Chelants	663
Corrosion Inhibitors	6,111
Defoamers	608
Inorganic Flocculants	3,459
Ion Exchange	903
Odor Control	956
Organic Flocculants	4,497
Other	1,389
Oxidizers & Biocides	2,993
pH Adjusters	1,486
Scale Inhibitors	3,748

Water treatment chemicals are part of a larger category labeled specialty chemicals or performance chemicals. The market for this broader category is $1 trillion per year. Large players include Dow Chemical, BASF, Bayer, INEOS Group and DuPont.

The major revenue producers in the water treatment chemicals market are formulators such as Ecolab (Nalco) and GE Water (Betz). They in turn are buying the specialty chemicals which they then mix and sell along with service expertise.

A number of acquisitions have taken place in the industry in recent years. In the most recent announcement, Lanxess AG agreed to buy U.S. competitor Chemtura Corp. for about $2.1 billion in cash, more than doubling the size of its additives business and accelerating a shift towards specialty chemicals. Chemtura sales are €1.5 billion with a pretax EBITA of €245 million. Chemtura sells bromine directly to some large customers but is also a supplier to formulators such as Ecolab. GE is planning to divest its water business. This includes the Betz water treatment chemicals. The sale of this group will have an impact on the market going forward. The divestiture target date is mid-2017.

The forecasts do not include the pH adjusters used in scrubbers. There is a very large market for lime and sodium compounds sold to power plants and other industrial emitters. Lime and limestone react with SO₂ to form gypsum. Much of the world’s gypsum wallboard is made with flue gas desulfurization (FGD) gypsum.

For more information on N026 Water and Wastewater Treatment Chemicals: World Market, click on: http://home.mcilvainecompany.com/index.php/markets/27-water/449-n026-water-and-wastewater-treatment-chemicals.

Hundreds of companies in the water business as well as private investors will be considering the purchase of GE Water. The first conclusion in a cursory review will be that this is a group of individual companies which operate independently and are not necessarily in the same markets. There are companies selling systems and major components, small components, instruments and consumables such as treatment chemicals.

The management of these businesses is challenging because of their diversity. The way you manage an effort to supply $50 cartridges is totally different than the way you manage an effort to sell knowledge which is bundled into the price of formulated chemicals. The management of a company which sells complete zero liquid discharge (ZLD) systems requires skills not required in some of the other businesses.

Danaher has been mentioned in the media as a potential purchaser. Their recent Pall acquisition has made Danaher a major player in pharmaceutical and chemical industry filtration. GE Water is focused more on power, oil and gas, refining and to a lesser degree on various water-related purification. So, the industry alignment is complimentary.

Xylem has grown the test segment of its transport, treat and test efforts. Its instrumentation or test business is mostly in municipal water and wastewater and compliments the GE instrumentation applications.

Other water chemical formulators such as Ecolab and Solenis and basic water chemical suppliers such BASF and Kemira are also potential purchasers.

Any of the large companies in the air, water, liquid, gas flow and treat businesses with an industry total revenue of $323 billion are potential purchasers.

The GE water treatment chemicals business is of greater value as the percentage reduction of end user knowledge to total knowledge continues to shrink. The formulated chemicals business is more problem solving with the right combination rather than sale of a product. Knowledge of the applications is critical. With the development of the smart sensors, the formulators can become remote operators or continuous advisors rather than just offering periodic advice as part of the chemical sale. Will potential investors fully recognize this opportunity? If they do, the potential buyer will be one who can best leverage this very large potential. The expertise in the use of chemicals along with filtration, valves, pumps, etc. will all create a very large remote advice, operations and preventive maintenance revenue opportunity.

The various relevant market reports for an evaluation of this opportunity are shown at: Markets

· The Environmental Protection Agency (EPA) is proposing to approve a State Implementation Plan (SIP) revision submitted by the State of Maryland

· Basin Electric will be required to install NO_x Controls on Three Plants in Wyoming

· Bataan Coal-fired Power Plant’s operation stopped amid complaints of Ash Fall

· Pushing for Coal-fired Power Plant in Mackay, Whitsunday, Isaac Region, Australia

· ABB supplies Balance-of-Plant Electricals for large Indian Coal-fired Power Plants

· Fortum to supply Low-NO_x Combustion Technology for Krakow Coal-fired Power Plant

The 41F Utility E-Alert is issued weekly and covers the coal-fired projects, regulations and other information important to the suppliers. It is $950/yr. but is included in the $3020 42EI Utility Tracking System which has data on every plant and project plus networking directories and many other features.

This service provides a connection for suppliers and coal-fired power plant operators around the world. It is free of charge to any coal-fired utility employee. It is designed to help owners make lowest cost of ownership decisions. The service covers combustion systems and components, flow control and treatment and air, water and solid waste pollution control. It addresses the four knowledge needs: Alerts, Answers, Analysis, Advancement.

Alerts: Six alerts and newsletters are included. The latest entries in the intelligence system are easily accessed. Daily entries in LinkedIn discussion groups are also available.

Answers: The intelligence system includes case histories, product information, regulatory analyses and all the past newsletters dating back to 1999 (over 1000 newsletters). Hundreds of hours of recorded webinars provide graphic as well as text answers.

Analysis: Upcoming webinars, the newsletters, white papers in the intelligence systems and detailed discussions in the LinkedIn groups provide analytical data. Focus on seeking the lowest total cost of ownership is one of the most valuable aspects of the service.

Advancement: The extensive webinar library and intelligence system provide the material for tailored training programs. If fills the needs of the trainee but also senior people who just want to keep up with the latest developments.

Air/Water/Gas, Liquid Flow and Treat Revenues $ Millions
Product	Power	Fluid	Municipal	Industrial and Other	Residential/ Commercial	Total
Flow (Water)
Pumps	3	8	14	20	8	53
Valves	7	13	7	39	20	86
Subtotal	10	21	21	59	28	139
Liquid Treatment
Cartridge	0	7	1	6	7	21
Sedimentation/ Centrifugation	1	0	2	5	0	8
Cross Flow Membranes	2	0	4	3	1	10
Macrofiltration	1	0	2	4	0	7
Subtotal	4	7	9	18	8	46
Oxidation and Destruction (Water)
Biological/Oxidation/Destruction	1	0	8	4	2	15
Water/Wastewater Chemicals	5	0	9	10	0	24
Subtotal	6	0	17	14	2	39
Indoor Air Treatment
Filtration/Purification	1	2	0	3	5*	11
Stack Gas Treatment and Flow
Fabric Filter	1	0	0	5	0	6
Scrubber	0	0	1	5	0	6
Precipitator	7	0	0	1	0	8
FGD	7	0	0	0	0	7
DeNO_x	6	2	0	1	0	9
Thermal/Catalytic	0	10	0	2	0	12
Fans and Compressors	4	2	2	12	5	25
Subtotal	25	14	3	26	5	73
Monitoring
Air	1	1	1	1	3	7
Water	1	1	3	2	1	8
Subtotal	2	2	4	3	4	15
Total						323