NEWS RELEASE March 2018
$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.