THE ENERGY INDUSTRY TIMES - SEPTEMBER 2017
Business Profile 13
Circulating
opportunities
It is always a big decision to spend
hard-earned money to acquire a
new business, especially during
challenging market conditions. But
there are times when some acquisitions
make perfect sense for all involved.
According to Tomas Harju-
Jeanty, CEO at the newly formed
Sumitomo SHI FW (SFW), the recent
acquisition of Amec Foster
Wheeler’s (Amec FW) circulating
fluidised bed (CFB) boiler business
by Sumitomo Heavy Industries is
one such deal.
“While there has been less consolidation
in the industry than I would
have expected, I think that Sumitomo
was ready to take the opportunity
when it appeared. One of the biggest
reasons was the long-term friendship
and cooperation that Foster Wheeler
has had with Sumitomo Heavy Industries
for around 20 years,” he
says, adding: “During this period the
Foster Wheeler CFB has become the
core business for Sumitomo’s Energy
and Environment business area.”
The sale of Amec FW’s CFB boiler
business, the largest part of its Global
Power Group (GPG), closed at the
end of June and will ensure the continuation
of Sumitomo’s own CFB
business. Since becoming a licensee
of FW’s boiler technology in 2001,
Sumitomo has sold 66 FW boilers
under the license.
“This is not an insignificant number
considering there about 478 Foster
Wheeler CFBs in total sold today.
So it’s very close to their business,”
notes Harju-Jeanty. “And the long
term relationship helped integration.
The companies know each other, the
key people know each other and the
collaboration has been tight over so
many years. It’s only been two
months but the integration is getting
there in an efficient way.”
Geographically, the deal makes
sense. Amec FW CFB business’s
global set-up had four operating units
– one in Asia, two in Europe and one
in the US– and the deal helps Sumitomo
to expand beyond Asia.
“Sumitomo had operated mainly in
Japan and wanted to expand their
global footprint beyond Japan and
Asia. GPG’s global CFB operation,
execution and sourcing networks
provided them with a good route to
deliver that strategy.”
In terms of technology the two
companies also shared the same
thinking. Both are firm believers in
the opportunities that CFBs present
in the solid fuel markets – whether
fossil or renewable solid fuels.
Harju-Jeanty points out that during
the licensee period, the two companies
enjoyed “a very close” relationship
– one which the former President
of Power Systems and
Technology at Amec FW’s Global
Power Group says was closer than
was typical, especially in terms of
technology.
“We’d been working on projects
and quite closely on common product
development. Over the past several
years, the Japanese small biomass
generation feed-in tariff has
seen Sumitomo developing smaller
scale biomass CFBs to a larger extent
than FW typically pursued. FW
focused on larger units and the scaleup
of the technology,” said Harju-
Jeanty. “With their domestic market
calling for smaller-sized biomass
units, Sumitomo has not been a licensee
that simply executes what the
licensor provides them with in
terms of technology, but developed a
competitive smaller size product that
we commonly benefit from.”
SFW believes that with both large
scale and small scale CFB technology,
it is well positioned for growth,
even in a power generation market
that has been sluggish following the
global economic crisis that began in
2008. The demand for energy and
power generation technology has
historically been driven by GDP
growth and although the link is significantly
weaker now than it has
been in the past, economic growth is
still a main driver.
“After the 2008 crisis, we recognised
that when economic growth
started to take place in 2010/2011,
energy demand was not exactly in
synch with GDP change any more.
But it’s still obvious that GDP
growth reflects economic activity,
which drives energy consumption.
With growth not being so aggressive
in Asia and stalled in the West, it creates
a challenge” Harju-Jeanty observes.
“However, we think that CFB
has good opportunities even in this
market environment.”
In terms of burning solid fuels, the
flexibility of CFB technology is unparalleled.
CFBs are able to burn a
broad range of solid fossil fuels such
as hard coal, lignite, anthracite and
petcoke, as well as biomass and recycled
and waste fuels.
Harju-Jeanty believes this flexibility
will see CFB taking a larger share
of the solid fossil fuel market. “Even
if GDP growth, one of the main drivers,
is not as strong as it was during
the boom years of 2005-2008, we
think that our opportunity comes
from the technology being able to
take a larger share of the total solid
fuel market.
“Environmental concern is also a
key driver. CFBs provide a highly
efficient alternative for utilising renewable
solid fuels. The ability to
co-fire coal and other fuels with biomass,
means we can reduce base
power carbon emissions by up to
half compared with conventional
generation.”
This, he says, could see the technology
significantly increase its
share of the fossil fuel power generation
market over the next 5-10
years from around 10 per cent today.
“Whether it grows to a 20 or 25
per cent share is always hard to say.
But due to its ability to provide
cost-efficient, reliable base load
production in markets that need to
support renewables, we believe that
its environmental performance, fuel
flexibility and operating reliability
will allow us to grow our share of
the fossil fuel market.”
Harju-Jeanty sees opportunities in
several regions. For countries that
use fossil fuels, key markets will be
Asia and the Middle East. “Now that
we have taken CFB technology to
supercritical utility scale, we are
working on a number of opportunities
with generators that develop high
efficiency, supercritical generation in
these areas. So several Asian countries,
Saudi Arabia, Turkey and other
Middle-East countries – are going to
be our key focus areas.”
SFW also noted it has been awarded
a contract aiming to build two 550
MW lignite-fired supercritical units
for a large utility’s power generation
facility in Central Europe. According
to Harju-Jeanty, the contract demonstrates
that the benefits of supercritical
CFB technology is increasingly
being recognised in Europe. “Also in
Eastern Europe where fossil fuel firing
is still a key part of the mix, we
are working to add opportunities.”
In Europe, biomass has provided
the main opportunities for CFBs and
Harju-Jeanty expects this to continue.
Japan and Korea will also continue
to offer biomass opportunities for
the new company, he adds. “The biomass
and recycled and waste fuel
market is no longer strictly European
and US but is also very much an
Asian market for us today.”
Looking at other potential markets,
Africa is also on the radar. “Opportunistically,
it is a very interesting market
for us.”
It is clear that what some see as
market challenges, SFW sees as opportunities.
“Our job is to provide
the solution to the operator’s challenge,
explains Harju-Jeanty. “When
a generator comes to us, he has two
ingredients in his business – the heat
from the fuel available to him, and
the power he has to generate from
that fuel under his contract. Our job
is to create a technical solution to
utilise the fuel in the most reliable,
efficient and environmentally optimised
way.”
It is an opportunity that he relishes
as head of the new company. “We are
really very happy about this combination
of Foster Wheeler’s CFB business
with Sumitomo Heavy Industries.
We are strongly at home with
SHI – we now have an owner that is a
technology company… and operates
in exactly the same way as us from
the former CFB part of the Foster
Wheeler Global Power Group.
“Sumitomo’s approach to technology,
R&D and product development
supports our business very, very
nicely.”
Following Sumitomo
Heavy Industry’s
purchase of Amec
Foster Wheeler’s
circulating fluidised
bed business,
TEI Times caught up
with Tomas Harju-
Jeanty to discuss
the deal and the
opportunities it
presents. Junior Isles
Harju-Jeanty believes that
with both large scale and
small scale CFB technology,
SFW is well positioned for
growth
... flexibility will see CFBs taking a larger share of
the solid fossil fuel market... even if GDP growth is
not as strong as it was during the boom years