NEWS RELEASE                                                                                                                MAY 2014

U.S. Air Pollution Control Companies Can Adjust To the Shrinking Coal Market

Suppliers of air pollution control systems in the U.S. have relied on huge purchases by owners of coal-fired boilers as the leading source of business since the 1920s.  More than 50 percent of U.S. air pollution control purchases have been by the power companies.  There are not likely to be any new coal-fired boilers in the next decade. This creates a significant challenge but one that can be met, says the McIlvaine Company in Air Pollution Management.  There are several routes:

Divestiture: One option for large multi-product companies is to sell their air pollution control division.  This was the route taken by Siemens when it sold Wheelabrator to Foster Wheeler.

Acquisition: Another option is to diversify into non-power related industries.  This was the route taken by Babcock & Wilcox when it purchased MEGTEC earlier this month. MEGTEC is a major air pollution control system supplier to the chemical industry and to many plants which utilize solvents.

International Expansion: The market for air pollution control systems in China is more than twice as large as the U.S. market was at its peak.  India is a generation or two behind China but has extensive needs.

Total Solutions: The world’s knowledge is expanding geometrically, whereas individual ability remains relatively static.  The increasing knowledge gap can be eliminated through outsourcing.  Suppliers of air pollution control systems can become the virtual operators of those systems.  Remote monitoring of operations along with smart valves, pumps, neural networks, optimization software and many other digital innovations allow the offsite experts to perform at a level which was, heretofore, impossible.

Maintenance should be anything but routine.  All the digital tools can reduce the cost and increase reliability by focusing on the components likely to fail if not attended.  The air pollution system supplier can also minimize the aggregate inventory of parts by storing them for multiple systems.  Typically, 80 percent of the components of air pollution control systems are supplied by third parties.  This includes fans, dampers couplings, nozzles, dust valves, pumps mist eliminators, motors, PLCs, DCS, bags, etc. The system supplier can generate significant profits by supplying the repair parts for all of the components in the system.

The major contribution of the system supplier can be to take responsibility for the results.  The system has to meet emission limits.  It should do so with minimum expense and with the least effect on production.  Plant operators can afford significant payments to achieve these goals.

Over 250,000 MW of coal-fired boilers will remain in operation in the U.S. for the next forty years (McIlvaine and DOE forecasts).  The absurdity of retrofitting and upgrading ancient boilers is a political reality. It is also a very big opportunity.  Building new boilers for the forty year run would be much less expensive.  Instead, the large outlays for keeping the old fleet running can be converted to profits by the APC companies.

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