NEWS RELEASE                                                                           April 2013

Flue Gas Desulfurization Revenues Will Range between $3 Billion to $8 Billion/Yr over the next 3 Years

Over the next three years revenues for new FGD systems (not including repairs) will rise and fall over a range of $3 billion to $8 billion per year. The reason for the substantial fluctuation is the size of individual orders, the definition of the cost, scope, and chronology. These new forecasts appear in FGD World Markets published by the McIlvaine Company.

Minimum FGD Orders

($Millions)

The above forecast is based on orders and not actual booked revenues. It assumes a 4 year delay from order to startup for FGD systems for new units. It assumes three years for retrofits. The revenue per MW is as low as $ 70/kw for new FGD systems in China. This represents typical vendor scope in China. Since 2/3 if the market ( in Mw) is for new coal plants in China, this low value makes a big difference in the estimate of market size.

The present forecasts also assumes a slowdown in orders for new Chinese power plants in the next three years. This forecast is also subject to change as plans become more firm. In China the turnaround on a new coal plant is as little as 2 years.

By contrast the average retrofit project in the U.S. costs $ 300-400/kw. This includes lots of cost borne directly by the utility and also costs of new fans and other components which are typically included by the utilities in estimating their project costs.

The year 2014 will be a bigger year in the Americas segment due to the new Utility MATS rule. This requires compliance with hydrogen chloride emission limits. The FGD scrubbers remove both the SO₂ and HCl. There are some new FGD systems in Latin America. Chile is installing a number of dry FGD systems.

In Europe there are some new coal-fired power plants and replacement of existing old FGD systems. There is little activity in Africa.

Asia is the big market. It will account for 50 to 70 percent of the total over the three year period. China will be the largest Asian purchaser. It is installing FGD with all the new coal power plants. Also there are retrofit projects driven by tougher SO₂ limits. The Japanese market may rebound due to an initiative to rely on coal to a greater extent.

India offers considerable long range potential. To date there have been a few seawater scrubbers installed on plants, but most have no SO₂ removal devices. Tougher regulations are anticipated, so FGD companies are positioning themselves to pursue this market. Mitsubishi Heavy Industries is partnering with BHEL to pursue this opportunity. Other international suppliers such as Alstom are also active.

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