April 2016 - FGD and DeNOx Insights 64

Market for Flue Gas Desulfurization Equipment Will Range between $5 and $10 Billion/yr. over the Next Seven Years

Major variables are making it impossible to predict the size of the power plant flue gas desulfurization (FGD) market over the next seven years. Under the most conservative scenario, the investment in new systems plus upgrades and replacements will be just $5 billion/yr. Under an optimistic scenario, the revenues will exceed $10 billion/yr. The factors impacting the market include:

· Cost of electricity compared to alternative sources such as gas and renewables

The U.S. market will be primarily a replacement market. The cost of gas-fired power is low, there are tough regulatory pressures on coal, and there is an illogical program to operate old coal-fired power plants rather than replace them with new ones even though limited life new power plants could be justified economically for the time frame.

Europe will build new coal-fired power plants to replace existing ones, but is not likely to expand its coal-fired fleet.

Asia is expanding its coal-fired generation and is a big potential market. Japan, Taiwan, Korea and China incorporate FGD on all new coal-fired power plants. There is uncertainty as to the utilization of FGD in new coal-fired power plants that will be built in India, Vietnam, Indonesia and other Asian countries.

The biggest wild card is China. It has spent more money on FGD than the rest of the world combined over the last five years. A combined program addressing both retrofits and new units created a huge market. Now most of the retrofits have been made and there are representations by some Chinese officials that coal will be de-emphasized in the future.

The facts create a different picture. A large number of new Chinese coal-fired power plants have been approved. There is the potential for nuclear to generate up to 50 GW, but this is less than the incremental increase in electricity consumption which will be needed each year.

The Chinese economic expansion depends on expansion of electrical capacity. Per capita consumption is only one-third of that in the U.S. even though the Chinese energy consumption per unit of GDP is more than double that in the U.S.

The most serious pollution problems in China are recognized to be smog caused in part by the lack of electricity and need to utilize high polluting solid fuels in small industrial and commercial facilities. The average Chinese citizen will give much credit to a government which reduces smog, but very little to one which reduces the world’s greenhouse gases.

The present McIlvaine forecast is for the FGD market to average over $7 billion/yr. over the next seven years with about $4.5 billion attributable to new installations and $2.5 billion attributable to upgrades and replacement parts.

§ China's Harbin and Saudi ACWA near Loan for Dubai Clean Coal Power Plant

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$14 Trillion to be spent on Power Plant Equipment and Repairs in the Next 25 Years

Electricity production will be up 100 percent by 2040. This will require an investment of $14 trillion in new hardware and repair parts for existing equipment and systems. Coal-fired generation will grow by 10 percent. One would, therefore, expect that investment in coal-fired power generation would be less than in other technologies. However, when you take into account repair and upgrades, coal-fired power will require more in investment than any of the alternatives.

World coal powered generation capacity is 2.2 million MW today and is slated to rise by only 10 percent or only 200,000 MW during the next 25 years. The investment needed to keep an old power plant running from age 50 to age 75 and to be upgraded to the likely emission limits, will be nearly equal to the $2 million/MW cost of a new power plant over a 25 year period. This means that $4.4 trillion will need to be invested in coal-fired power. Much of that will be in Asia where many new power plants will be built. Net capacity will drop in Europe and the U.S. This does not mean that the two areas will not be spending money on coal-fired power plants. The U.S. moratorium on new coal-fired power plants and the necessity to maintain 200,000 MW of coal-fired capacity means that the U.S. will have to spend $400 billion just to keep the old power plants running and meet increasingly stringent environmental standards.

Power Plant Investment 2015-2040
Generator Type	$ Trillions
Coal-fired Power	4.4
Gas Turbine Combined Cycle	2.2
Nuclear	2.0
Biomass	0.6
Wind	2.3
Solar	2.8
Total	14.3

Nuclear capacity is slated to increase from 392 GW in 2013 to more than 620 GW in 2040. But its share of global power generation will rise just one percentage point to 12 percent, because almost 200 reactors of the 434 operational at the end of 2013 will be retired, they will need to be offset by new power plants. Total investment will exceed $2 trillion over the next 25 years.

The gas turbine combined cycle power generation market will grow by more than 300 GW to over 2 million GW by 2040. Replacements, upgrades and retirements all result in a net capital investment of $2.2 trillion.

Biomass capacity will be 300 GW in 2040. Wind capacity will be 1300 GW and solar 1000 GW.

By 2040 Chinese energy production will be twice that of the U.S. but per capital consumption will still be only half that of the U.S. The gas turbine market in China will be bolstered by the Chinese coal-to-gas program which will deliver gasified coal to turbine generators throughout the country.

India today is home to one-sixth of the world’s population and is its third-largest economy, but accounts for only 6 percent of global energy. Demand for coal in power generation and industry will surge increasing the share of coal to almost half of the energy mix and making India the largest source of growth in global coal use. By 2040, Asia is projected to account for 80 percent of coal consumed globally. Coal will remain the backbone of the power system in many countries.

Many components of coal and gas turbine generating plants need to be replaced frequently. Catalyst for a coal-fired power plant is replaced every 3-5 years and every 10 years for a gas turbine power plant. Boiler feedwater valves will be replaced more frequently in a gas turbine power plant due to the constant cycling and phenomena such as Flow Accelerated Corrosion (FAC). Slurry pumps, ball mills, fans and air pre-heaters in coal-fired power plants are in periodic need of replacement parts. Both coal and gas turbine operators are now more likely to use zero liquid discharge (ZLD) systems which are high maintenance systems.

Coal-fired power plants are switching from electrostatic precipitators to fabric filters. This results in biannual purchases of new bags. Gas turbine plants now favor high efficiency inlet filters which are more expensive and need more frequent replacement than the low efficiency alternative.

The power plant generation market was reviewed in a McIlvaine Hot Topic Hour on April 7.

McIlvaine publishes market reports with detailed forecasts of the power market. They include: