• Briefs
• Large Replacement Market for Municipal Wastewater Combust, Flow and Treat Products
• $30 billion/yr Aftermarket and $10 billion/yr Innovation Market for FGD

Briefs

Webinar: Wednesday:  The webinar Wednesday will cover all aspects of the program to pursue the municipal wastewater treatment market.  A summary of projected revenues for major components, services and software will be provided along with examples of the use of edge computer software by component software.  The program to identify the purchases by individual prospects will include a 50 slide analysis just of BEWG.  Sometime will be spent viewing 62EI North American Municipal Wastewater Treatment Facilities and People Database  and Municipal Wastewater Decisions.

Click here to register for the free webinar

Forecasts for Replace and Repair for all CFT products.  We point out below that the market for FGD replace and repair components is bigger than the new market. We are justifying the same conclusion tor the municipal wastewater industry.  Big new markets driven by regulations have slowed down. They still exist in India, and some other developing countries but the Chinese market is maturing while the markets in the OECD countries are already mature. Even the shale or tight oil technology has leveled off but at a very high level.  The result will be a more modest swing in the market for components such as pumps and valves. The shale market in the U.S. not only reduces oil and gas prices but protects against arbitrary price manipulation by OPEC. The large replacement market for production related components will offset the swings in the extraction market. The big growth area will be IIoT and Remote O&M. CFT product suppliers can expand from the SOM or Serviceable Obtainable Market to WOM or Wisdom based Obtainable Market

 Impact of IIoW Empowered IIoT on the Combust, Flow and Treat Market.

China as a Technology Leader:  Longking is one of the world's largest air pollution control companies. It also spends more on R&D than most rivals in the OECD. It is a leader in dry scrubbing technology, hybrid ESP-filters, and other cutting-edge technologies. In the webinar this week we will be covering BEWG and their program to improve aerator efficiency at their 300 wastewater treatment plants in China. We will also cover the plant they are completing in Singapore which is under tennis courts and a park.  The plant will provide reusable effluent and incorporates high efficiency turbo blowers for aeration. In the last half of twentieth century the environmental markets boomed, and market leaders were created in the countries with the most stringent regulations.   In terms of NOx reduction and tough limits China now has the most stringent regulations. This includes limits for automobiles as well as stationary sources.  As a result, China over the last two decades rose from a production rate of less than 5% of the stationary SCR catalyst to more than 40% of the world total.  The advice to CFT system suppliers is to expect more international competition from Chinese based companies.  The advice to component suppliers is that there is a big opportunity to work with companies such as BEWG and Longking.

Large Replacement Market for Municipal Wastewater Combust, Flow and Treat Products

The market for combust, flow and treat (CFT) products for municipal wastewater treatment plants is growing faster than GDP and is larger than represented in many reports. Forecasts for purchases of each type of product by municipal wastewater plants is made possible by detailed analysis of the treatment flow rates and each specific variable impacting the market for a product.

The starting point to determine the market for CFT products is the installed treatment capacities.  The difference in installed capacity from one year to the next equals new builds less retirements. Pumps, valves, nozzles, blowers and similar components need to be replaced every 10-15 year.  So, unless the new build growth rate is higher than 6%/yr for a component replaced every 15 years or 10%/yr for components replaced every 10 years the replacement market will be larger than the new market. In a high growth country such as India the new build expenditure will be far greater than the replacement, but the total investment will still be small compared to a country such as the U.S. with 40,000 MGD of installed secondary treatment capacity.

It is possible to greatly improve the accuracy of market forecasts by obtaining accurate flow forecasts and then relating the investment for each component as a function of flow rate. The following segments need to be considered.  Incremental new systems, new systems which replace retired systems, replacement components, repair and service of existing components.

Over the life of the average pump, blower or high-performance valve the cost of repair will exceed the original cost. As a result, the largest markets for component suppliers are at existing plants in countries with a large installed base.

The movement to IIoT and Remote O&M adds the potential to expand the service and advisory opportunity and to negotiate yearly contracts which can be fixed price or on a partnership basis where the owner and supplier share the savings.

Since owners will be armed with total cost of ownership data due to IIoT and data analytics, the supplier will want to spend the time to prepare a total cost of ownership evaluation. If his is not the lowest then he will need to invest in R&D and be able to submit the Lowest Total Cost of Ownership Validation (LTCOV).

It is highly desirable and possible to forecast the purchases for the few hundred enterprises which buy or influence the majority of the component purchases. BEWG operates more than 300 wastewater plants in China and other countries.  Suez operates half the wastewater plants in Chile and remotely monitors plants around the world from a remote center in France.  Many countries have privatized wastewater treatment plants.  This results in just a few hundred organizations with very large purchases.

Forecasts for each component are compiled in McIlvaine multi-client or custom reports. 

The Multi-client reports are shown under MARKETS.

Profiles of the largest operators along with activity at specific plants is included in Municipal Wastewater Treatment Plants and People.

The market for guide, control, measure and remote monitoring is included in IIoT and Remote O&M.

$30 billion/yr Aftermarket and $10 billion/yr Innovation Market for FGD

History: There has been more than $300 billion invested in Flue Gas Desulfurization Systems since the first system was installed at Union Electric in St Louis in 1968. This system was a result of a partnership between Environeering with the scrubber knowledge and Combustion Engineering, the world's largest coal fired boiler supplier.

In the early years it was a sellers' market with innovation, knowledge and risk taking being the dominant attributes for success.  Since all components were purchased the return on investment (ROI) for knowledge was huge.  The only problem was that with a volatile regulation driven market the negative ROI based on risk eventually erased the profits based on knowledge. 

Most of the European and U.S. FGD suppliers eventually faced either bankruptcy or fire sales to more diversified companies.  Of the early participants only the Mitsubishi/Hitachi, Babcock and Wilcox, and Chiyoda names are still relevant.   Research Cottrell, Joy, Deutche Babcock, Combustion Engineering, Saarberg Holter, KRC, Steinmuller, Peabody and other original participants have disappeared or been integrated.  

The most convoluted is GE.  The sequence is Peabody and an Ontario Hydro spin off become part of GE (GE Environmental Systems) which eventually become part of Marsulex.  Combustion Engineering was sold to ABB which then sold the division to Alstom which was then sold to GE.  The order just received by GE for an FGD system for NTPC is a design originated by Environeering/Combustion Engineering.  So over 30 years GE has divested itself of one FGD system company and now owns one of its original competitors.

System Suppliers: The leading FGD suppliers in recent years have been Longking, Wuhan Kaidi, Guodian and other Chinese suppliers.  BHEL is suddenly looming as a major supplier based on its awards in India.  MHPS is one of the original suppliers who still has a significant market share. This company is a result of the merger between the Hitachi and Mitsubishi power divisions.

In general, the recent contracts are based on much less knowledge and risk than the early ones.  Suppliers have failed to innovate.  As a result, the system offerings today vary little from the ones offered in the early days. Any difference is in the components, consumables and chemistry.

The quality of limestone, treatment chemicals, bags, nozzles, linings, mist eliminators, filter belts, agitators, gypsum oxidation compressors, pumps, valves, instrumentation, drives, controls, fans, ball mills, cyclones and other components has greatly improved.  The control of chemistry is vastly improved.  As a result, the modern FGD system has no more downtime than the rest of the boiler system.  These improved components also result in SO₂ removal above 98% compared to the 80% target in the early days.  In fact, China presently has even more stringent limits.

Components and Consumables: The annual cost of nozzles, valves, fans and compressors is approximately 15% of the original cost.  By 2023 there will be 2 million MW of FGD systems in place, this means that components for 30,000 MW will be replaced each year.  Over the years the new system purchases have varied from 1000 to 90,000 MW.  The average has been less than 30,000 MW.  As a result, replacement components represent a market larger than that for new components.

The market for consumables such as filter belts, seals, bags, limestone, treatment chemicals, balls for ball mills and others has continued a slow but steady rise over the years.  The reduction in the total installed FGD in the U.S. and Europe will be less than 100,000 MW over the next five years and will be offset by 200,000 MW of new systems in Asean countries, India, and South Africa and a few others. The result is a steadily increasing market for components and consumables.

Innovation: The international system suppliers lost market share because they failed to innovate.  Large numbers of companies entered the U.S. market in the 1970s. Japanese and German companies entered the market in the 1980s.  There was not a large enough or sustainable market for them.  So, R&D and innovation was not fundable. The trend continues with many Chinese suppliers and now Indian suppliers (mostly under license).  However, because of the big retrofit market the innovation potential is greater than ever.

Here is an example: the successful MgO system at Philadelphia Electric unintentionally created a rare earths feedstock.  With the knowledge we now have this system can be slightly modified to produce rare earths, high quality flyash, hydrochloric acid and sulfuric acid or a pure gypsum which can compete with precipitated calcium carbonate. HCl Scrubbing and Rare Earth Recovery from Coal-Fired Power Plants and Gasifiers are the Perfect Marriage

The relatively new catalytic filter combined with dry sorbent injection could carve out a significant market.  Lime is a better reagent choice for wet scrubbers as well as dry scrubbers under certain conditions. Under certain conditions there is a good market for ammonium sulfate and certain other by-products.  More modest innovations such as improvement of scrubber internals and selection of the natural oxidation and flyash/sulfate for landfills are also attractive.

The biggest innovation potential is remote operation and maintenance support for FGD systems around the world.  Europe and the U.S. have an excess of FGD experts. Asia has a big need.  With cloud-based systems an expert in Windsor, Connecticut can be making judgements based on feed from a remote-control center in the Philippines and a plant operating in Vietnam. MHPS already has the remote-control center in the Philippines' but it is presently mostly monitoring rotating equipment.  With cloud-based software MHPS could extract the world's expertise for each component and each consumable.

The potential for component and consumables suppliers is very high.  An international limestone supplier can work with local suppliers and guide them.  He can provide optimum limestone quantities and qualities to plants all over the world.  The international nozzle supplier has the same opportunity.   Valve and pump suppliers have not only the FGD opportunities but those in all the other plant processes. The compressor delivering oxygen for FGD gypsum can be controlled based on local electricity costs, needed gypsum quality and other parameters.

The McIlvaine Company is in the position of guiding suppliers based on a combination of standard reports and "Forecasting".  In addition to the FGD report (N027 FGD Market and Strategies ), there are also reports on IIoT and Remote O&M, valves, pumps, treatment chemicals, liquid filtration, fabric filters and precipitators.  Special reports are also available for all other components. All the projects are tracked in the Utility Tracking System which also includes purchases by all the largest utility companies.  Details on the reports are available at www.mcilvainecompany.com.   For more information on custom forecasting contact Bob McIlvaine at rmcilvaine@mcilvainecompany.com