November 2015 - Water Market Insights 171

448 Companies and Projects Will Account For 41 Percent of Liquid Macrofiltration Purchases

Sales of liquid macrofiltration equipment will be $6.9 billion in 2015. Suppliers who focus on 448 purchasers, engineering firms and large projects will be addressing 36 percent of the total potential. This is the conclusion reached by the McIlvaine Company in N006 Liquid Filtration and Media World Markets.

Large operators, system suppliers and architect engineers influence the majority of the purchases. A relatively small number of large projects also account for much of the market. There is overlap in that most of the large projects involve large operators and many of the filter specifications are made by large engineering firms. Some of the large projects such as a big new potash plant in Canada do not involve major operators. If a supplier pursues the large projects as well as the large operators, suppliers and engineering companies, he will be addressing 36 percent of the market.

The scope of the report includes filter presses, belt filter presses, drum filters, automatic backwashing filters, granular media filters and bag filters.

There are thousands of purchasers of filters. Many of the projects are quite small. These small projects involve filter sales of less than $40,000. Large projects with filter equipment needs of more than $40,000 account for 15 percent of the revenue in the chemical industry and 30 percent of the revenue in the mining industry.

Sixty large companies and projects will address 20 percent of the chemical industry market of $700 million. Average purchases for the 60 will be $2.3 million creating an opportunity of $140 million.

There is a concentration among chemical industry purchasers. For example, BASF will account for 1.8 percent of the liquid filtration purchases in the chemical sector. The top 10 chemical companies will account for 10 percent of the purchases.

In the “other industry” sector, 230 companies/projects have been identified whose purchases will average more than $3.9 million each.

The mining sector is concentrated with just 53 companies making 51 percent of the decisions. ArcelorMittal operates coal and iron mines but also operates close to 100 steel mills as well. It purchases more than 1 percent of all liquid filtration equipment.

It is recommended that liquid filtration suppliers create specific programs to address this combination of companies and projects. The relatively small number of large opportunities makes a proactive approach possible. McIlvaine has created a unique route to market by combining the Detailed Forecasting of Markets, Prospects and Projects with McIlvaine project tracking services.

The world faces difficult pollution control decisions. For every dollar spent on pollution control, there is an alternative investment in health improvement. For every dollar spent on reducing one pollutant, there is an alternative to reduce another. The most prudent course to make the best investment should include:

The history of climate change research can be measured in decades. Research on particulate pollution is measured in millennia. In England in the middle ages, the color of chimney smoke was used as a basis for regulation. Despite the struggles to eliminate particulate pollution, it remains the pollutant with the most negative impact on human health.

The science of particulate capture has progressed tremendously over the centuries. Today it is known that small particles are more deleterious than large ones. Many regulations are precisely written around particles smaller than 2.5 micrometers in diameter (PM_2.5). Immense numbers of research papers provide great statistical detail based on this size classification.

However, there is a problem. Few particles are spheres. There is also a weight differential. A tubular shaped particle of silica has to be equated to a sphere of lead. The analytical methods use “intelligent classification.” But one should view any conclusions based on particle size with “intelligent uncertainty.”

There are two different worlds of particulate removal. One deals with pollution control of stack gases. The other deals with purifying air for semiconductor cleanrooms. A tester using a high efficiency (HEPA) filter inserted in the stack and remaining clean will pronounce the air as clean as the most pure ambient air on earth.

However, there is another problem. The most pure air on the most pristine mountain is very dirty according to operators of semiconductor plants. In fact this air contains more than 100,000 small particles per cubic foot. As a result, semiconductor plants invest heavily to create Class 1 cleanrooms with less than one particle per cubic foot. They use a technique called condensation nuclei particle counters to make the efficiency measurement.

The complexity and uncertainty relative to the most researched pollutant should inspire us to apply intelligent uncertainty to any and all recommended initiatives. Intelligent classification entails effort. Furthermore, intelligent use of niche expertise is essential. If you need filters for your cleanroom, you do not utilize an expert in stack gas control.

Global warming decisions are enhanced by experts in tens of thousands of niches. The complexities are infinitely greater than those affecting particulate emissions. The scope of advice extracted from each expert should be narrowed to his area of expertise. The expert on sea level rise should not be asked what percentage of electricity should come from solar energy.

Tribal Values: Regulations on NO_x have resulted in extensive investment in selective catalytic reduction (SCR) by power plants. NO_x travels thousands of miles. So the reduction at one source does not necessarily benefit nearby citizens. However, these SCR systems also generate sulfuric acid in varying amounts. The acid is deposited near the stack. In one case in Ohio, the SCR installation resulted in so much acidic damage that the power plant bought and demolished an entire small town (better catalysts have now eliminated this problem).

We have a moral issue regarding tribal values. The world tribe benefits from NO_x control but the Cheshire, Oho tribe lost everything. Global warming will benefit some people and negatively impact others. Each country will have to decide whether to put aside tribal values for the good of the world. Since countries such as the U.S. spend 99.9 percent of resources on the U.S. tribe and almost nothing on the Sudanese or Syrians. the tribal value is a factor which must be addressed.

Net Present Value: Some pollution control benefits are immediate. Others are longer term. What is the comparative value for something which benefits us or benefits our grandchildren? There is no simple or universal answer. Economists use net present value. The annual anticipated interest rate discounts the future value. However, this rate will vary greatly between developing and developed countries. Those who have everything are more interested in creating a better environment for their grandchildren. Those without anything are worried about keeping their children alive for the next month.

Last week China approved a $20 billion pipeline to transfer gas derived from coal to cities thousands of miles away from the north central coal regions where the coal will be gasified. This clean gas will be used in boilers and gas turbines to replace solid fuels which are causing much of the smog in Chinese cities. The immediate benefit will be enormous. Hundreds of thousands of lives may be saved as a result of this program.

The greenhouse gas impacts will also be significant. Some CO₂ will be generated as a result of the gasification process. When the gas is burned in the turbines and boilers, additional CO₂ will be generated. However, if the alternative is imported LNG, then the impact is much less. Some of this gas will replace cow dung, wood chips and coal used in small boilers and cooking fires. In these applications, the gas substitution is a big environmental improvement. Alternatively, China could accelerate its wind and solar program. However, this program could not be accelerated to have the immediate impact of the gasification pipeline.

So this decision by China involves important tribal and net present value considerations. The gasification program will clearly benefit the Chinese but will contribute to the world’s global warming. The gasification program will save many lives in the short term, but may create a less desirable world 50 years from now. It is likely that China cannot be dissuaded from this program at the 2015 United Nations Conference on Climate Change in Paris because tribal values are strong and, as a developing country, China places higher value on the present than do the wealthiest countries.

The solutions to the world’s pollution problems should be considered with intelligent uncertainty utilizing the best combination of niche experts who will provide the most valuable classifications including the tribal and net present values.

McIlvaine Company takes into account the potential impact of these factors in its forecasting and believes that this consideration is necessary for the greatest possible benefit to clients. Information on consulting services can be obtained from Bob McIlvaine at rmcilvaine@mcilvainecompany.com.

Worldwide installations of new gas turbines will average 74,000 MW per year over the next five years. The system sales revenue will be $75 billion per year. GE, Siemens and the other turbine vendors will generate revenues of $20 billion/yr. just for the turbine equipment. This is the latest projection in 59EI Gas Turbine and Combined Cycle Supplier Program published by the McIlvaine Company.

The worldwide installed gas turbine capacity is 1.5 million MW. Purchases of repair parts consumables and upgrades at existing power plants will average $30 billion/yr. Part of this investment will be a result of greenhouse gas initiatives. The least expensive way to reduce the carbon footprint is to make the existing gas turbine more efficient. Adding the steam cycle makes the biggest difference but there are other options as well. Inlet filter replacement for existing units will be more than $500 million. Another $460 million will be spent for SCR systems and catalyst per year. The market for replacement parts for pumps and valves will be significant.

The gas turbine equipment suppliers purchase most of the components they furnish as part of turbine packages. Complete turnkey systems, including the gas turbine, steam turbine, cooling towers, HRSG, SCR, etc. are sold by a number of companies who do not manufacture turbines. Despite the fact that the purchaser could be an end user, a system supplier or an EPC, the number of companies purchasing filters, treatment chemicals, instrumentation, pumps and valves is very limited.

Those suppliers selling hardware for new power plants need to contact the operators, the system suppliers and the engineering companies. Those selling consumables have a more limited target.

It terms of end users, there are less than 100 power plant operators who will buy most of the equipment and consumables. E.ON has 23,000 MW of gas turbines in operation while Calpine has 26,000 MW. Together they have over 3 percent of the world’s installed capacity. The number of system suppliers and engineering companies is also limited. Black & Veatch, Burns & McDonnell, Sargent & Lundy, Bechtel, Kiewit and a few other U.S. based architect engineers do a lion’s share of the engineering work.

The number of equipment vendors is even more limited. GE had a 49 percent of the global gas turbine market last year, followed by Siemens with 23 percent, Mitsubishi Hitachi with 17 percent and Alstom with 2 percent. With the purchase of Alstom, the GE share will rise above 50 percent. In addition, GE has made a huge investment in a new more efficient design which may boost their share well above 50 percent.

GE’s new flagship, HA Turbines, will be the largest and most efficient in their class. The first delivery was to EDF’s Bouchain combined cycle power plant in France in August and is now being installed. The first U.S. order is from Exelon. Four 7HA turbines intended for expansions at the Wolf Hollow and Colorado Bend plants in Texas are expected to come online in 2017.

The 50-hertz 9HA and 60-hertz 7HA both come in two different models. The 9HA.01 is rated at 397 MW in simple cycle mode and 592 MW in 1 x 1 combined cycle mode, while the 9HA.02 is rated at 510 MW in simple cycle and 755 MW in combined cycle. The 7HA.01 and 7HA.02, meanwhile, are rated at 275 MW and 405 MW and 337 MW and 468 MW, respectively.

Both designs can achieve better than 41 percent efficiency in simple cycle and more than 61 percent in combined cycle. GE says the 9HA.01—the model slated for Bouchain—can reach full power in 30 minutes and ramp at 60 MW per minute.

GE already has $1 billion in firm orders for 7HA and 9HA turbines—16 units so far—and 53 potential projects around the world have opted for the turbines. GE hopes to sell up to 500 of the new design by 2030, which could represent up to half of its gas turbine sales.

For hardware purchased directly by gas turbine suppliers, one company represents more than 50 percent of the potential and three companies combine for 90 percent.

Most suppliers have a direct sales force for large customers and a network of sales representatives or distributors for the balance of sales. Since 70 percent of the sales will be to less than 100 large operators, equipment suppliers and engineering companies, it is important to focus on the direct sales effort. McIlvaine has developed Detailed Forecasts of Markets, Prospects and Projects which is included along with 59EI Gas Turbine and Combined Cycle Supplier Program.

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DATE

UPCOMING HOT TOPIC HOUR

UPCOMING MARKET UPDATES

Dec. 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