Lack of skills and labour for plant management restrains market growth

Paul Boughton
The intensifying quest for alternatives to fossil fuels and the need to bridge the energy demand and supply gap has opened up new avenues for the waste to energy plant market.

The escalating threat from farming and municipal waste poses serious environment problems. As fossil fuel reserves are fast depleting, there is a pressing need to step up the tempo of research to find alternative methodologies and technologies. Waste from farms, gardens, industries and municipalities can be utilised to obtain petroleum substitutes, heat and electricity.

New analysis from Frost & Sullivan's Key Opportunities in Waste to Energy Plant Market research finds that there are a number of new and emerging technologies that are able to produce energy from waste, which could be broadly classified based on the nature of conversion. The two main groups are thermal technologies and non-thermal technologies.

"Hydro-photosynthetic and thermo-chemical transfer processes can help capture carbon dioxide gas emitted by industries to convert into usable synthetic petroleum that has high calorific value," said Technical Insights Senior Research Analyst Avinash Iyer. "Besides limiting the need for traditional fuels the technology helps in lowering the total energy costs and cutting greenhouse gases emissions."

The European Union (EU) had issued a Waste Incineration Directive (2000/76/EC) in December 2000. The directive lays down standards for EU members for the incineration of municipal solid waste. It is aimed at minimising the negative impacts on the environment and human health resulting from pollutants in air, soil, surface and ground water from the incineration and co-incineration of waste. The regulation has provided an impetus for EU members to roll out technically advanced incineration plants to attain high standards in emission control.

With South Asian countries witnessing rapid industrialisation and consumer spending, opportunities are proliferating for market participants to recover energy from waste. This will spiral up the growth in the waste-to-energy plant market in the Asia Pacific region. At the same time, with government support, large investments can also be expected in the near future.

Waste-to-energy plants require high levels of expertise for designing and operating the plant using various kinds of wastes and technologies. When an opportunity arises for a waste-to-energy plant to be commissioned, the required local human resources with necessary technical skills for its smooth operation may not be readily available. For instance, in many Asia Pacific countries, European and North American companies are lending their resources and sharing their expertise. However, language barriers impede the growth of the waste-to-energy companies in these markets.

Waste management is highly regulated within the municipal infrastructure because of a wide range of regulatory goals to protect human health and the environment. Furthermore, it also promotes waste minimization and recycling, restricts certain types of waste management activities, and reduces impact on residents. Though a wide range of waste management legislation and policies exist in the developing countries, regulations that are more stringent are required for greater effectiveness.

North America, the EU, and Japan have numerous incineration plants where a majority of industrial wastes is utilized for energy production. However, to cater to the rising energy demand, many more waste-to-energy plants need to be designed and commissioned, and the respective government bodies must extend substantial support.

"In developing countries, controlled incineration of waste is infrequently practiced because of high capital and operating costs, as well as their history of previous unsustainable projects," said Iyer. "Thus, for successful utilisation of industrial waste, appreciable support should be extended by both policy regulators and government bodies."

Rise in green consciousness

The rise in green consciousness all over the world has exerted pressure on power plant owners to build new plants that emit fewer pollutants and adhere strictly to globally-approved standards of emission control.

As most of the planned power plants in Southeast Asia and Australia and New Zealand (ANZ) regions are based on coal-fired technology, there is an urgent call to adopt advanced power generating techniques. These novel solutions not only aid compliance with emission standards but also increase energy efficiency and plant availability rate.

New analysis from Frost & Sullivan, Asia Pacific Power Plant Services Market, finds that the Southeast Asian and ANZ markets together earned revenues of US$946.7 million in 2010. This is likely to grow to US$1.54 billion in 2017 due to increasing investments in power plants, renovation and modernisation of existing power plants and growing presence of independent power producers that are more open to outsourcing power plant services.

"The use of advanced technologies in power generation will provide more opportunities for power plant service providers to offer highly skilled and prompt service to utilities and independent power producers," says Frost & Sullivan Program Manager Suchitra Sriram. "The future of the power generation equipment manufacturers is not just limited to selling high-end technical equipment but include the provision of technologically competent, prompt, timely and cost-effective service."

Improving energy efficiency

Regular power plant servicing serves the dual purpose of improving the energy efficiency of the plant as well as deferring significant capital investment in new plant constructions in the short term. Technological advancements in main power plant equipment, an ageing fleet, and plants' rising concerns about emission all contribute to the need for plant servicing.

While servicing can help postpone the construction of new plants, it is not possible to entirely do away with the need to set up new ones, mainly due to the escalating demand for electricity, which in turn, is a consequence of the population explosion and increasing rate of urbanisation. Despite the market's huge potential, there are limited operation and maintenance (O&M) outsourcing opportunities, as these tasks are normally undertaken by the in-house staff of power plants.

Power plants continue to view power generation and operation as their core business and seldom outsource these functions to service providers. Most power plant owners in the region perceive long-term service agreements with OEMs as very expensive, incommensurate with the value it offers. Hence, in many cases, power plant owners undertake maintenance and repair services through open tenders, on a transactional basis.

Although power plants are mostly reluctant to relinquish control over O&M, utilities do see some merit in outsourcing power plant servicing to its subsidiary service companies.

"The expanding presence of independent power producers (IPPs) in the power market and the mounting pressure on utilities to decrease operating costs are likely to enhance outsourcing opportunities over the next six to seven years," notes Sriram. "The market is expected to expand once technically advanced power generating equipment gets deployed across greenfield, brownfield and re-powering power plants."

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