September 2017 - McIlvaine Insights 31

Our IIoT webinars have been recorded and offer free market information on each industry. Our webinar tomorrow on renewables has forecasts for wind, solar, biomass, geothermal and hydro plus specific opportunities at BHE. Our pulp and paper, pharmaceutical, chemical and other recent webinars provided rankings for the top purchasers. The nuclear webinar on October 11 will provide insights on the combust, flow, and treat purchases of the major nuclear power generators. To register for our webinars click on:

Bob Mcilvaine will be speaking at the Dry Scrubber Users Association conference on the 20^th and will be roaming the exhibit Hall at WEFTEC the week of the 30^th. He would welcome the chance to talk to you.

As you can see from the following analyses, Mcilvaine is providing forecasts for the range of combust, flow, and treat products for the 550 largest operators (end users) but also for the 400 largest OEM/EPC's. In the new IIoT world high performance products will be purchased or the decisions made about them by relatively few people. The mass of data on the performance of every valve, pump, filter, and fan will be in the hands of the corporate people. They will then be very influential and knowledgeable.

By identifying the experts making these decisions it is then desirable to link them up with the experts in your organization. High performance products by definition are purchased based on total cost of ownership analyses. The cloud is going to be generating continuous TCO analyses of every product. This being the case some claims made by non-experts will not be effective. So, sales success in the future will be by leveraging your lower total cost of ownership and utilizing your experts to make the case.

FGD Purchases of $19 billion are Being Determined by Only a Few Thousand People

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.

Membrane cartridges are used in separation processes in the pharmaceutical industry. They are also used to purify water for use in products. A third use is the removal of contaminants from wastewater. According to the latest forecast in Cartridge Filters: World Market the pharmaceutical industry will spend $1.2 billion on cartridges in 2018.

World Region	2018
Total	1,198
Africa	13
CIS	7
East Asia	308
Eastern Europe	15
Middle East	33
NAFTA	418
South & Central America	53
West Asia	47
Western Europe	304

NAFTA will continue to be the leading consumer although East Asia is showing the most quantitative growth. West Asia and specifically India is showing the largest percentage growth.

Membrane cartridges are in the high-performance category. This means that they are purchased more based on performance and less on price. As a result, a few thousand people at end users, EPCs, and system supplier companies are making most of the purchase decisions. The top three pharmaceutical companies are spending more than $130 million/yr. for these cartridges.

Ranking	Company	2020 Membrane Cartridge Purchases $ millions	Market Share %
1	Pfizer	49	4.40
2	Merck	34	3.00
3	Roche	37	3.29
4	Sanofi	33	2.99
5	Johnson & Johnson	31	2.79
6	Novartis	30	2.71
7	AbbVie	24	2.14
8	Gilead	23	2.04
9	AstraZeneca	22	1.92
10	Amgen	22	1.92
11	GlaxoSmithKline	21	1.88
12	Takeda	19	1.70
13	Teva	17	1.53

This report provides forecasts for 80 countries in each industry for four types of cartridges. It also provides estimated purchases by 550 end users and 400 EPC's, and system suppliers.