McIlvaine: $200B market for power plant desulfurization systems

According to the latest McIlvaine Company forecast of World FGD Markets, over the next 12 years owners of coal-fired power plants will spend $200 billion dollars to add flue gas desulfurization (FGD) systems to existing and new combustion units...

NORTHFIELD, IL, Oct. 10, 2008 -- Over the next 12 years, owners of coal-fired power plants will spend $200 billion dollars to add flue gas desulfurization (FGD) systems to existing and new combustion units. This is the latest forecast of the McIlvaine Company in World FGD Markets, an online continually updated report.

Over 800,000 MW of coal-fired boilers will be fitted with scrubber systems. Over 2000 units at an average cost of $100 million/unit will be installed.

China will be the largest purchaser of these systems followed by the United States. However, many countries around the world will be investing in cleaner air.

The forecast is based primarily on known projects through 2013. Subsequent to that date the forecast is based on a combination of known projects and those that are likely due to regulatory, new construction or other initiatives. These factors have been weighed using a tool called "Important Event Odds." For example, the odds are calculated at 10-1 in favor of natural gas prices staying above $4/MMBtu.

The forecast is relatively unaffected by the severity of greenhouse gas regulation. Europe is presently building a large number of new coal-fired plants with FGD. These units are 30 percent more efficient than the older units which are being retired. Thus, one of the main strategies for CO2 reduction is the replacement of inefficient coal plants with new ones. This boosts the market for FGD capital equipment but not the consumables market (e.g. lime and limestone).

Most of the systems which will be installed will use limestone as the reagent introduced as wet slurry. There will be major investments in ball mills, pumps, wastewater treatment, and stack liners. The markets for lime and limestone will increase substantially. Suppliers will be challenged to provide enough high calcium limestone to meet the needs.

The major FGD system suppliers are U.S., Japanese, and European companies. However, Chinese licensees are gaining extensive experience and are likely to become international suppliers of systems. Presently they are building FGD systems in China at less than 50 percent of the cost elsewhere in the world.

The market will be strengthened due to the need to remove mercury and HCl as well as SO2. Scrubbers remove all three contaminants. The need for multi pollutant control will shape the decisions as to which type of scrubber will be selected. Dry scrubbers are better at removing SO3. Wet scrubbers are cost effective in removing mercury chloride and HCl. They will also remove more selenium. On the other hand, dry scrubbers will remove more arsenic, lead, and other particulate metals.

The market will also be shaped by the desire to be "carbon capture ready." If SO2 limits as low as 10 ppm are deemed to be necessary to insure good operation of a carbon capture scrubber, then this will be an important parameter in scrubber selection. It will be difficult for dry scrubbers to meet these limits.

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