January 2016 - Filtration and Centrifugation Insights 61

20,000 MW of New Gas Turbine Facilities in the U.S. Are Being Built By Just 10 Companies

Annual increases in gas turbine power generation in the U.S. will be 18,000 MW/yr over the next five years. The ten largest developers have 20,000 MW underway at 24 different sites. This is the conclusion of the McIlvaine Company in 59EI Gas Turbine and Combined Cycle Supplier Program.

The ranking of the ten largest power producers is based on the proposed gas turbine-based power capacity. (We limit our data only to those projects which are currently still on track and are either in the approval or permitting process or currently under construction.)

Rank	Power Producer
Rank	Power Producer
1	Panda Power Funds
2	Dominion
3	Exelon
4	Competitive Power Ventures
5	Advanced Power
6	Duke Energy
7	Coronado Power Ventures
8	NTE Energy
9	NextEra Energy
10	PSEG

Of particular interest is that half of these companies are private companies owned by investors with the primary intent of developing the facility, perhaps operating it for a while, then selling it at a profit when the timing is right. (The five are Panda, CPV, Advanced Power, Coronado and NTE.) The activity by private companies creates an additional challenge for large component suppliers who must forge new relationships. It is a benefit to smaller suppliers or those new to the market that has more difficulty being considered by the large utilities.

The U.S. will account for more than 20 percent of the new gas turbine power generation in the next few years. This makes it an attractive market for suppliers of power plant systems and components

Precision Forecasting of Flow Control and Treatment Products is Now Possible

The wealth of available information and the power of the computer now make possible bottoms-up precision forecasting of product and service revenue rather than the traditional top-down approach.

Because of rapid changes in key factors such as oil prices or political crises, it is now possible to economically provide precision forecasting on a continuously updated basis.

One example is the forecasting of compressors for flue gas desulfurization (FGD) gypsum formation. Precision forecasting requires a systematic analysis through each of eight steps.

The first task is to select the product category. In this case it could be all the blowers and compressors used for this service or just one of the options. The determination of the type of blower or compressor is a task unto itself. First one needs to determine the forecast for the product category.

The drivers include expansion of coal-fired power plants, replacement of existing compressors but also modification of power plants. Many countries have required retrofitting of FGD to boilers.

China is the largest purchaser of FGD gypsum blowers and compressors. The country can be divided into nine major combinations of provinces and autonomous zones to conform to the territory likely to be covered by an individual salesman.

Increased electricity consumption and the desire for clean air are the basic drivers behind the compressor purchases. So wealth, population, wants and needs are all relevant.

Secondary drivers are critical but are the most challenging. The FGD gypsum compressor is not used in all coal-fired power plants but only those with FGD systems. The sub process is critical. The dry approach requires no compressors. The wet approach with natural oxidation does not require compressors. The incorporating product is also important. One type of scrubber (tray tower) needs larger compressors than another type of scrubber (spray tower).

Precision forecasting requires that this comprehensive approach be used first for all the relevant processes, sub processes and incorporating products. When this data has already been determined, the effort to forecast compressors is greatly reduced.

Prediction metrics are critical. Failing all else one uses value/value metrics. A new coal-fired power plant of 1000 MW costs $2 billion. The compressors cost $1 million. So the forecast for coal-fired power revenues can be multiplied by .0000005. It is much better to use MW of capacity, gallons of slurry/MW and m³ of air required to obtain the prediction metrics.

The forecasts can be supplied with both revenue and unit numbers and even average size of units. This is possible because McIlvaine tracks every new project and existing power plant around the world and can determine average project size.

The associated revenue is subject to many variables, so establishing the amount of air required and number of units should be the base forecast. In a country such as China, the cost of a compressor purchased locally vs. internationally can be different. But one cannot use general assumptions. Investigation shows that Chinese purchasers have spent more money for the more reliable and efficient international compressors.

This choice is partly driven by the higher cost of electricity in China. Efficiency vs. price is also a factor in the type of compressor or blower selected. The forecasting is improved if the electricity costs in each country/state/province are also known and utilized.

Precision forecasting can be achieved by McIlvaine because it integrates all the products and services used in the $350 billion flow control and treatment market and because it uses the eight step bottoms-up approach.

Flow Control and Treatment Companies Will Be Unevenly Impacted By the Chinese Slowdown and Oil Priced Drop

The flow control and treatment market will grow by 2 percent in 2016 to $340 billion. In general small Asian suppliers will achieve the highest percentage growth. The performance of the large international companies will be mixed. McIlvaine is analyzing each of the larger companies to compare their forecasts to the world market trends.

Clarcor will join many other international flow control and treatment companies who will experience revenue losses in 2016 while the world market increases modestly. The strength of Clarcor is that a large percentage of the sales come from consumables rather than capital equipment. The weakness is the low market shares in Asia and certain other geographies where growth will exceed the average.

Clarcor anticipates revenues falling by approximately 2 percent in 2016 based on revenues of $1.4 billion.

Mobile filtration revenues will be up worldwide by 4 percent as more vehicles are driven more miles. The primary growth will be in Asia. The poor quality of ambient air in Asian countries and the need for air filters in homes and commercial buildings will help boost stationary air filtration sales by 4 percent.

The stationary liquid filtration sales will be down only modestly due to the high percentage of consumables in the mix. Oil production will be up in 2016 even if the capital expenditures for new equipment will be down substantially. Companies such as Clarcor who sell replacement filters will benefit.

Two of the major unknowns and concerns in 2016 are the price of oil and gas and the status of the Chinese economy. Neither one of these should have a substantial impact on Clarcor sales due to its mix of products.

The growth in LNG production in the U.S. is a positive factor for Clarcor. Clarcor expects sales of gas turbine inlet filters to remain flat in 2016 but the world market will be up by more than 5 percent. This is a combination of increased power generation but also increases in unit selling prices. High efficiency filters selling at twice the price of existing medium efficiency filters can be justified based on improvements in gas turbine operations.

A number of power plants around the world are converting their particulate control technology from electrostatic precipitators to fabric filters. This could boost filter sales by more than 20 percent per year when the movement is fully implemented. The challenge for the BHA group within Clarcor will be to achieve high market shares in countries such as China, Russia, Chile and Italy where these conversions are presently taking place.

The McIlvaine Company forecasts market shares and markets for all the products made by Clarcor in the following publications:

Utility E-Alert Tracks Billions of Dollars of New Coal-fired Power Plants on a Weekly Basis

· LG&E announces Plan to close and cap Coal Ash Ponds at Two Power Plants

· Otter Tail Power finishes Major Upgrade at Coal-fired Power Plant in Big Stone, SD

· KU to invest nearly $700 million to meet EPA’s new Coal Combustion Residuals Rule

· EGCO continuing with 500 MW Coal-fired Power Plant Project in the Philippines

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.

Segment	World Revenues $ Millions	Clarcor Revenues $ Millions	Clarcor % of World	World % Change	Clarcor % Change
Mobile Filtration	12,000	600	5	4	-4
Stationary Air Filtration	8,000	250		4	-2
Stationary Liquid Filtration Including Oil and Gas	10,000	250		-1	-2
Air Pollution Control	10,000	300	3	3	-2
Total	30,000	1,400		3	-2