Hundreds of new coal-fired ethanol plants to add to water equipment market

Like Brazil, the U.S. is building hundreds of ethanol plants to substitute this homegrown product for gasoline. While the first were built with gas-fired boilers, new plants are likely to use coal-fired steam generators. Some are already operating and others are in construction. The impact of the coal-firing will add billions of dollars in equipment revenues, including for water and wastewater treatment, predicts the McIlvaine Company in its "World Market for Your Products" report...

NORTHFIELD, IL, March 2, 2006 -- The U.S. is following the lead of Brazil and is building hundreds of ethanol plants with the goal of substituting this homegrown product for gasoline. While the first plants were built with gas-fired boilers, new plants are likely to use coal-fired steam generators. Some are already operating and others are in construction. The impact of the coal-firing will add billions of dollars in equipment revenues, including for water and wastewater treatment, predicts the McIlvaine Company in its "World Market for Your Products" report.

Just the additional capital expense of $18 million for coal-firing per 50 million gallon/yr plant will boost worldwide expenditures in ethanol plants by $2-$10 billion over the next eight years depending on what percentage of the plants select coal. This is in addition to the tens of billions of dollars which will be spent on the balance of the plants.

Five plants in operation or under construction in the U.S. are using coal-fired boilers with a cost of $45 million each. This includes the boiler, material handling systems, fabric filters, non-selective catalytic reduction for NOx, and dry scrubbers using lime for SO2 removal.

All these plants require the same instrumentation and continuous air pollution monitors used by the large plants, so this will be a large market for suppliers of these instruments.

Coal-firing boosts the market for liquid/solid separation equipment. Centrifuges and other filters are required in the ethanol processing. Since some of the coal-fired boilers will be fitted with wet scrubbers, the market for wastewater separation equipment will also be positively impacted.

The market for pumps and valves used in ethanol processing is substantial. The addition of coal-firing adds another 30% to the potential. The same is true for the market for water and wastewater treatment chemicals with the exception of lime which is even greater. Due to the need for SO2 removal, the market for lime greatly increases where coal-firing is utilized.

McIlvaine predicts that most ethanol plants in the future will rely on coal. However, there are several attractive alternatives to building dedicated small coal generators. One route being demonstrated at the Coal Creek Power Plant by Blue Flint Ethanol and Great Rivers Energy is to co-locate the ethanol plant with an existing coal-fired steam generator. The waste steam will supply the ethanol plant. This greatly reduces the capital cost and increases the theoretical efficiency of the coal plant.

Another route is to build multiple steam using plants along with a new coal-fired generator. This has the advantage not only of waste steam use but the economy of scale. This approach is being used in Goodland, Kansas.

In "World Market for Your Products," McIlvaine projects a double-digit growth rate in ethanol production for the present level worldwide of 13 billion gallons/year. The U.S. will overtake Brazil this year with production of 4.7 billion gallons vs. 4.0 billion for Brazil. China will be the next largest producer with 1.3 billion gallons. India will be next with 0.7 billion gallons.

The entire production of the EU this year will only be 1.3 billion gallons. New legislation, however, will cause this market to grow substantially over the next five years. There are more than 300 plants under construction and planning worldwide.

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The McIlvaine Company (www.mcilvainecompany.com) is based in Northfield, IL, with a staff of 35 people that includes engineers, scientists and market researchers.

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