WELCOME
Weekly selected highlights in flow control, treatment and combustion from the
many McIlvaine publications.
Briefs
Coal Fired Boiler IIoT and Market Webinar on April 25:
You can see from the analysis below that the combust, flow and treat market for
coal fired boilers is very slow growing but is very large. International
component suppliers can penetrate the Asian Market.
To find out how just register at
Click here to Register for the Webinars
Municipal Wastewater:
The webinar last week covered the growing Asian market for Combust, Flow & Treat
(CFT) products but also documented the large replacement market in the U.S. and
Europe. In the future large operators, consultants, and system suppliers will
make most of the CFT purchasing decisions.
You can view the webinar at https://youtu.be/Yl_AGdDWbr0
. You can also subscribe for 3 months at no change to
Municipal Wastewater Decisions
Forecasting Purchases of CFT Equipment for each Large Chemical Producer:
Unlike coal fired power or municipal wastewater where one plant is similar to
another chemical plants differ greatly.
The best way to obtain accurate forecasts is to create factors that can
be applied to production capacity. The problem with a company such as BASF is
that there are many different products being produced. This necessitates
separate forecasts for MDI, chlorine and other products. It took a Power point
presentation with 118 slides just to create the foundation from which each
specific product can be analyzed and forecasts determined.
For more information on this initiative
Click Here.
Coal Fired Boiler Component Market is Large and Slowly Growing
The market for combust, flow and treat (CFT) products for coal fired boilers is
large and not shrinking. It is larger than represented in many reports.
Forecasts for purchases of each type of product is made possible by detailed
analysis of the MW of capacity and each specific variable impacting the market
for a product. In the past the
change in capacity has been overshadowed by new environmental regulations.
Over the last 40 years there has been wave after wave of investment as
one region after another adopted air and water pollution emission limits.
There is still a wave in the ASEAN nations and India, but this wave is
overshadowed by the 2000 GW of environmental equipment which needs to be
constantly repaired and replaced.
The starting point to determine the market for CFT products is the installed
generation 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 years. So,
unless the growth rate is higher than 6%/yr to 10%/yr the replacement market
will be larger than the new market.
In a high growth country such as India the new build expenditure will be greater
than the replacement, but the total investment will still be small compared to
that in a country such as China with 1000 GW of coal fired capacity. The
compound annual growth rate (CAGR) for installed capacity ranges from 7% in West
Asia to a negative 5% in NAFTA. In
two regions capacity will be shrinking.
But the component market will be substantial even if it is being reduced
by 2-3% per year.
(Megawatts)
World Coal Fired
Capacity |
|
Region |
CAGR % |
Total |
1 |
Africa |
4 |
CIS |
2 |
East Asia |
3 |
Eastern Europe |
2 |
Middle East |
2 |
NAFTA |
(5) |
South & Central America |
0 |
West Asia |
7 |
Western Europe |
(2) |
The result will be a very large but mature market for CFT components.
This contrasts to the market for new coal fired boilers and environmental
control systems which will be much lower than in the past.
Consider the market in 1974 in the U.S. OPEC cut off oil to the U.S.
Utilities panicked and ordered 70,000 MW of new coal fired boilers within a few
months. From 1974 to 2018 less than 70,000 MW of new capacity was actually
installed in the U.S. So, the order
rate has been negative for the last 44 years. China has initiated FGD and SCR
programs which in just a few years resulted in 400,000 MW of environmental
retrofits.
Those days are gone. Not only have these big sudden markets disappeared but the
technology has become standardized.
This means that Indian and Chinese companies are supplying systems at prices
which exclude international competition.
The same is not necessarily true of components. There could be some
system exceptions. The problem is that the international system suppliers do not
have the profits to reinvest in R&D.
Let's take rare earth extraction as an example. The Philadelphia Electric MgO
FGD system coincidently makes a perfect rare earths feed stock in the
HCl/particulate scrubber. DOE and
the Chinese government are pursuing the expensive micronizing of fly ash
landfills rather than the much more cost effective in situ approach, but no
vendor is attempting to leverage this very big potential.
It is possible to greatly improve the accuracy of market forecasts for
components by obtaining accurate capacity forecasts and then to relate the
investment for each component as a function of capacity. 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 this 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. Let's use FGD components as an example.
FGD Example: 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 |
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.
For more information click on the markets click on
N027
FGD Market and Strategies
or contact Bob McIlvaine at
rmcilvaine@mcilvainecompany.com
847-784-0012 ext. 112.
The DowDupont recommendations for Advanced Manufacturing and McIlvaine thoughts
on IIoT and IIoW
Andrew Liveris is the executive chairman of
DowDuPont, a $73 billion
holding company (the two giant chemical companies merged in September). Mr.
Liveris will relinquish the role of executive chairman of the combined company
April 1. Co-lead director Jeff Fettig will assume that role at the company.
The McIlvaine Company has consulted for Dupont and Dow periodically over the
entire 44 years since incorporation. Some of the consulting has been technical
including provision of a test scrubber to better measure performance. Marketing
advice has been provided for RO membranes, Teflon gloves, Tyvek garments, the
larger water market and the potential for amine scrubbing and sulfuric acid
production for the power industry. One assignment relative to water markets
addressed the Dow U.S. vs. international capability. Therefore, we read with
interest the recent comments of Mr. Liveris on this subject.
Liveris is the author of Make It in America: The Case for Reinventing
the Economy, in which he writes that America's economic growth and
prosperity depends upon a strong manufacturing sector. According to Liveris,
there is a widespread lack of understanding among the public of what today's
manufacturing - which he referred to as advanced manufacturing - actually
consists of. (Definitions vary, but the OECD defines advanced manufacturing
technology as computer-controlled or micro-electronics-based equipment used to
make products.) Liveris stated, "We are generating a new wave of technology to
generate a knowledge economy. And a knowledge economy will need things made.
They'll just be made differently."
Advanced manufacturing might include making smartphones, solar cells for roofs,
batteries for hybrid cars, or innovative wind turbines. Liveris said he had
visited a DowDuPont factory the previous week that is working on advanced
compasses to enable wind turbines with blades the size of football fields. The
goal is to produce blades light and efficient enough to make wind power a viable
reality. "That's technology. That's advanced manufacturing," he said.
Liveris said that 7.5 million technology jobs left America between 2008 and 2016
because the country wasn't supplying appropriate candidates. The reaction of
many businesses was to re-locate to "the Chinas, the Indias, and the places that
were supplying that sort of skill." In the United States right now, he said,
there are half a million technology jobs open, but American educational
institutions are only graduating roughly between 50,000 and 70,000 candidates
per year, so there's a "massive under-supply." In the next three years, there
will be 3.5 million jobs created, and Liveris said the U.S. might only be able
to fill about 1.5 million of them through a combination of graduation and
immigration. "Unless immigration is fooled with, which is a whole other issue."
According to Liveris, a critical reason for America to revive its manufacturing
sector is to promote innovation. "Something that we at Dow and many of us in
manufacturing know: If you have the shop floor, if you make things,
you have the prototype for the next thing, so you can innovate." Conversely, if
you stop making those things, your R&D diminishes dramatically, he said.
Liveris called advanced manufacturing "the best path for the United States" and
said, "We're so naturally suited for it if we'd just get the policies to help
us."
A big proponent of STEM education, Liveris said that American schools are not
graduating the workers we need. "We have convinced ourselves that a four-year
college degree of the skills we used to have in the last century is what we
should still keep producing." He said that re-tooling American education needs
to happen immediately, with STEM education incorporated at every level including
elementary school. STEM is
a curriculum based on the idea of educating students in four specific
disciplines - science, technology, engineering and mathematics - in an
interdisciplinary and applied approach.
Why the Industrial Internet of Wisdom should be a major factor in STEM and
advanced manufacturing.
During much of the period when McIlvaine was consulting for Dow Midland there
were accelerated retirements and other methods to cope with the shift of a good
percentage of production to overseas locations. The retiring people typically
were the most experienced.
The concept of the Internet of Wisdom to empower IIoT includes connecting
knowledge and people. It involves knowledge systems led by not just subject
matter experts (SMEs) but subject matter ultra-experts who continually learn as
they help improve the decision systems and guide the users. In this manner you
retain the services of the senior people and with the construction of the
decision system ensure that their knowledge will not be lost.
The McIlvaine IIoT and Remote O&M service champions the use of SMUEs to be a
third-tier source of wisdom in the monitoring of all the combust, flow and treat
components. They are available in crises and through cloud access can be
instantly provided with necessary details. Their work on the decision systems
will result in guidance by the operators in the developing countries and ensure
that the crises are kept to a minimum.
Mr. Liveris makes a very good point about building advanced manufacturing in the
U.S. However, the more basic products made by Dow/Dupont need to be produced
near to the end markets. The development of Dow subject matter experts and
decision systems will generate a number of high level jobs in the U.S. This can
be in addition to the STEM-trained personnel who will be working in advanced
manufacturing. Many aspects of the more basic STEM program can also be enhanced
by some access to the decision systems.