December 2016 - Water Market Insights 213

McIlvaine is creating a digital route for critical decision making. It involves LinkedIn discussion groups and webinars where subjects are debated. It includes intelligence systems with case histories and white papers. An important component is the recorded presentation with the same informality but insightful knowledge which your sales people routinely display. McIlvaine InterWebviews™ are posted in the Global Decisions Orchard, on YouTube and can be linked from your website. They are important components in the digital decision systems.

What is important is to create a recording to answer the questions your prospect needs to hear before moving forward with you. The discussion atmosphere created by the McIlvaine host responding to a focused presentation is invaluable. Your sales people spend thousands of dollars in preparation and travel just to make this type of presentation to one customer. The InterWebviews™ is a way to permanently leverage this investment.

Informality is winning the day. The polished corporate brochure is being replaced by the power point presentations being prepared by sales and application engineers. Your customers are spending a good part of the day viewing text messages with abbreviated words and emails that come directly from the originator and not through a secretary.

This same informality can be applied to your recorded presentations. Let the sales engineer prepare the power points and make the presentation. This low-cost approach allows you to make 20 recordings for the price of one polished advertising agency version. The credibility of an engineer who knows his product rather than a professional presenter resonates with the viewer.

The presentation, prepared in English, can be revised and delivered by a sales person speaking in another language. Check out the CBI presentation “Mercury in Mandarin” at InterWebviews™.

As part of the major McIlvaine initiative to build the digital decision systems, we are offering a steeply discounted rate on all InterWebviews™ for the next three months. The cost will be only $40/minute with a minimum of 15 minutes, so this is only $600. We recommend short-focused presentations. This allows you to create recordings for each product in each application in each major language.

Machine-to-machine communication will be the catalyst to robust growth of sensors and related electronics to measure the status of air, water, combustion gases and other gases and liquids used in fossil, nuclear and renewable energy power generation. Solids such as coal, lime and dry chemicals also must be monitored. The 2020 market is predicted to grow to $78 billion, according to the McIlvaine Company in its N031 Air and Water Monitoring: World Market report.

Power Plant Monitoring Market in 2020
Generation Type	Monitoring and Automation Revenues $ Billions
Coal-Fired Power	30
Gas Turbine Combined Cycle	20
Nuclear	18
Wind and Solar	2
Geothermal and Biomass	4
Hydro	4
Total	78

There are large numbers of new coal-fired power plants in planning in Asia, Africa and other areas. Plants in the United States are suddenly no longer faced with the necessity of closing due to the change in administration. They are now reviewing how to make these power plants more efficient for long-term operation. The quickest payback will be in better control of the solids, gases and liquids. To improve combustion, sophisticated devices such as tunable diode lasers allow monitoring of oxygen and CO₂ at numerous points within the boiler. This information is then used to adjust burner dampers.

The software associated with the monitors can learn empirically and optimize operations. It can also provide information for remote control of a fleet of generators or for use by vendors to supply advice or actual operational control.

Ultrapure water is used in nuclear, gas turbine, coal, geothermal and biomass-fired power plants. A number of process steps can be optimized and the use of chemicals reduced with improved monitoring. The balance of the steam cycle involves high temperature liquids and vapors which must extract heat from high temperature corrosive combustion gases. Distribution of flow is critical and can be optimized with better monitoring.

Air pollution control and wastewater treatment costs are rising along with the stringency of regulations. One utility owner is planning on saving $200 million just by a combination of optimization steps to reduce NO_x. Zero liquid discharge (ZLD) wastewater systems are now dictated in many areas. Sophisticated monitoring is required in the dewatering and evaporation steps.

Ambient air and water monitoring is increasingly needed as plants need to validate pollution sources. One utility was accused of being the cause of high selenium levels in the river and had to demonstrate that the selenium contamination was occurring upstream.

Smart valves, pumps and other components relay information which can be used to reduce maintenance and ensure reliable operation. Instead of periodic costly inspections, components are repaired when problems are discovered.

Lubrication systems are critical to reliable operation of wind, gas and steam turbines as well as fans, pulverizers, compressors and other rotating components in power plants. Monitoring pressure, flow and leakage are important.

Some of the biggest beneficiaries will be the automation system providers. GE, Emerson, Siemens, ABB, Yokogawa and others are offering extensive packages. Boiler system suppliers such as Doosan, BHEl, MHPS and B&W are incorporating automation systems into their packages.

System integrators are buying and incorporating sensors. Several years ago, GE sold its KVB Enertec group to B&W who now supplies complete continuous emissions monitoring packages and service. Some of the large consulting and EPC companies also have systems integration offerings. One reason is the continuous servicing requirements which result in long-term contracts.

There are many instrument suppliers. Thermo Fisher is the largest. GE is selling its water business which includes the former Sievers instrument group. Danaher is one of the rumored potential purchasers of GE Water. Its Hach division is very large in the water monitoring segment.

The expansion of municipal drinking and wastewater treatment in Asia is one of the driving forces which will ensure that growth in the water treatment chemicals market will exceed the rise in GDP. The 2017 market is forecast at $27 billion. This is the latest forecast in N026 Water and Wastewater Treatment Chemicals: World Market. Corrosion inhibitors will be the leading product segment.

Subject	2017
Total	27,585
Activated Carbon	772
Chelants	663
Corrosion Inhibitors	6,111
Defoamers	608
Inorganic Flocculants	3,459
Ion Exchange	903
Odor Control	956
Organic Flocculants	4,497
Other	1,389
Oxidizers & Biocides	2,993
pH Adjusters	1,486
Scale Inhibitors	3,748

Water treatment chemicals are part of a larger category labeled specialty chemicals or performance chemicals. The market for this broader category is $1 trillion per year. Large players include Dow Chemical, BASF, Bayer, INEOS Group and DuPont.

The major revenue producers in the water treatment chemicals market are formulators such as Ecolab (Nalco) and GE Water (Betz). They in turn are buying the specialty chemicals which they then mix and sell along with service expertise.

A number of acquisitions have taken place in the industry in recent years. In the most recent announcement, Lanxess AG agreed to buy U.S. competitor Chemtura Corp. for about $2.1 billion in cash, more than doubling the size of its additives business and accelerating a shift towards specialty chemicals. Chemtura sales are €1.5 billion with a pretax EBITA of €245 million. Chemtura sells bromine directly to some large customers but is also a supplier to formulators such as Ecolab. GE is planning to divest its water business. This includes the Betz water treatment chemicals. The sale of this group will have an impact on the market going forward. The divestiture target date is mid-2017.

The forecasts do not include the pH adjusters used in scrubbers. There is a very large market for lime and sodium compounds sold to power plants and other industrial emitters. Lime and limestone react with SO₂ to form gypsum. Much of the world’s gypsum wallboard is made with flue gas desulfurization (FGD) gypsum.

Hundreds of companies in the water business as well as private investors will be considering the purchase of GE Water. The first conclusion in a cursory review will be that this is a group of individual companies which operate independently and are not necessarily in the same markets. There are companies selling systems and major components, small components, instruments and consumables such as treatment chemicals.

The management of these businesses is challenging because of their diversity. The way you manage an effort to supply $50 cartridges is totally different than the way you manage an effort to sell knowledge which is bundled into the price of formulated chemicals. The management of a company which sells complete zero liquid discharge (ZLD) systems requires skills not required in some of the other businesses.

Danaher has been mentioned in the media as a potential purchaser. Their recent Pall acquisition has made Danaher a major player in pharmaceutical and chemical industry filtration. GE Water is focused more on power, oil and gas, refining and to a lesser degree on various water-related purification. So, the industry alignment is complimentary.

Xylem has grown the test segment of its transport, treat and test efforts. Its instrumentation or test business is mostly in municipal water and wastewater and compliments the GE instrumentation applications.

Other water chemical formulators such as Ecolab and Solenis and basic water chemical suppliers such BASF and Kemira are also potential purchasers.

Any of the large companies in the air, water, liquid, gas flow and treat businesses with an industry total revenue of $323 billion are potential purchasers.

The GE water treatment chemicals business is of greater value as the percentage reduction of end user knowledge to total knowledge continues to shrink. The formulated chemicals business is more problem solving with the right combination rather than sale of a product. Knowledge of the applications is critical. With the development of the smart sensors, the formulators can become remote operators or continuous advisors rather than just offering periodic advice as part of the chemical sale. Will potential investors fully recognize this opportunity? If they do, the potential buyer will be one who can best leverage this very large potential. The expertise in the use of chemicals along with filtration, valves, pumps, etc. will all create a very large remote advice, operations and preventive maintenance revenue opportunity.

The various relevant market reports for an evaluation of this opportunity are shown at: Markets

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

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.

Air/Water/Gas, Liquid Flow and Treat Revenues $ Millions
Product	Power	Fluid	Municipal	Industrial and Other	Residential/ Commercial	Total
Flow (Water)
Pumps	3	8	14	20	8	53
Valves	7	13	7	39	20	86
Subtotal	10	21	21	59	28	139
Liquid Treatment
Cartridge	0	7	1	6	7	21
Sedimentation/ Centrifugation	1	0	2	5	0	8
Cross Flow Membranes	2	0	4	3	1	10
Macrofiltration	1	0	2	4	0	7
Subtotal	4	7	9	18	8	46
Oxidation and Destruction (Water)
Biological/Oxidation/Destruction	1	0	8	4	2	15
Water/Wastewater Chemicals	5	0	9	10	0	24
Subtotal	6	0	17	14	2	39
Indoor Air Treatment
Filtration/Purification	1	2	0	3	5*	11
Stack Gas Treatment and Flow
Fabric Filter	1	0	0	5	0	6
Scrubber	0	0	1	5	0	6
Precipitator	7	0	0	1	0	8
FGD	7	0	0	0	0	7
DeNO_x	6	2	0	1	0	9
Thermal/Catalytic	0	10	0	2	0	12
Fans and Compressors	4	2	2	12	5	25
Subtotal	25	14	3	26	5	73
Monitoring
Air	1	1	1	1	3	7
Water	1	1	3	2	1	8
Subtotal	2	2	4	3	4	15
Total						323