Bold, bullish and an exceptionally good fit
The recent acquisition of Amec Foster Wheeler’s circulating ﬂuidised bed (CFB) boiler business by Sumitomo Heavy Industries Ltd is a big deal in the biomass to energy world. The new entity Sumitomo SHI FW (SFW) calls itself, “A new global leader in sustainable energy solutions,” a seemingly bold and bullish statement that on closer examination has plenty of substance to it.
In March 2017, UK-headed Amec Foster Wheeler plc (FW) revealed that it had signed an agreement with Japan-headed Sumitomo Heavy Industries Ltd (SHI) to sell its “core boiler business” – the design, manufacture and installation of circulating ﬂuidised bed (CFB) boilers – to SHI. The GBP 137 million (≈ EUR 161.8 million) deal was part of FW’s “non-core” asset disposal programme and at the end of June, the deal was completed.
Sumitomo SHI FW (SFW) is the new name with CFB and BFB steam generators and gasiﬁers, CFB scrubbers, metallurgical waste heat boilers and aftermarket services now part of SHI’s Energy and Environment Group oﬀering. FW was subsequently acquired in full at the beginning of October by Scotland-headed John Wood Group PLC, a global player in the delivery of project, engineering and technical services to energy and industrial markets.
The FW-SHI deal is one of several industrial boiler combustion technology mergers and acquisitions (M&A) to take place over the last 18 months suggesting that there is movement towards further consolidation. However, a major diﬀerence with the FW-SHI M&A is scale – the company size, its global reach and the capacity range of its combustion technology capabilities.
The most recent comparable M&A that springs to mind is when Metso acquired Wärtsilä’s share of the duo’s MW Power Oy joint venture in 2012. MW Power subsequently ended up in Valmet Oyj after the Metso demerger at the end of 2013. Prior to that the A-Tec Industries AG and Austrian Energy & Environment Group (AE&E) bankruptcies in 2010 was also a rumble – an intricate aﬀair with the latter being a subsidiary of the former.
Nonetheless, the end result was that Hitachi Zosen Corporation picked up AE&E Innova Holding with its moving grate technology to become Hitachi Zosen Innova AG (HZI) and Andritz AG assimilated the ﬂuidised bed technology from AE&E into its oﬀering to the industrial and municipal energy sectors.
New name with familiar faces
Though the SFW name may be new, it’s ﬂuidised bed (FB) and circulating ﬂuidised bed (CFB) boiler technologies are well-known with-in waste-to-energy, forest industries, municipal heat and power and energy utilities in North America, Europe and Asia. Furthermore, all 15 oﬃces in said territories and the staﬀ that worked with FW and SHI respectively prior the acquisition remain unchanged under SFW.
Thus FW and SHI are no strangers to the market or to each other for that matter – SHI has been a licensee of FW’s boilers since 2001. This all ought to facilitate the organisational transition process. Testament to the close working relationship is that Tomas Harju-Jeanty, former President of Power Systems and Technology at FW’s Global Power, is now CEO for SFW.
– We have gotten to know each other very well over the two decades of cooperation between us. During that period Foster Wheeler’s CFB has grown to become a core business with-in Sumitomo’s energy and environment group. So I believe that Sumitomo was ready to grasp the opportunity to acquire the business when it appeared, said Harju-Jeanty.
A CFB market leader
The ﬁrst new order announced under the new SFW ﬂag came already in July from Swedish municipal energy utility Mälarenergi AB, its third boiler order from SFW this century, suggesting continued conﬁdence in the technology and in the new constellation. According to ﬁg-ures from SFW, it has over 670 ﬂuidised bed installations around the world of which 482 are of CFB type – 66 of these CFB units were sold by SHI under license Harju-Jeanty revealed.
SFW estimates that it is the original equipment manufacturer (OEM) of almost 50 percent of “operating CFB’s in our served markets”. Combined, SFW installations total 37.4 GWe of power SHI capacity and have clocked over 30 million hours of operational experience using a diverse range of solid fuels including biomass, peat and waste.
Again ﬁgures from SFW show that although 90 percent of operating CFB capacity uses coal, petcoke or lignite as a primary fuel, 10 percent use biomass, waste or peat as the primary fuel source – Mälarenergi (Sweden), Summit Handa Power (Japan) and MGT Teeside (UK) being recent pipeline projects in point.
The operative word is “primary” as it is this multi-fuel capability that makes CFB combustion technology such an attractive proposition for industrial and utility applications. Whilst energy plant owners and operators in the Nordics may be very well versed and operationally proﬁcient with biomass, waste and peat fuels, the same cannot be said elsewhere where experience is limited or non-existent.
And with increasing demands being put on energy utilities and industries to clean up thermal energy generation, increase the share of renewables and reduce the carbon footprint of production, the fuel ﬂexibility of CFB’s allows wiggle room and a certain degree of risk mitigation, at least as far as fuels and technology are concerned.
Click here to continue reading the article in Bioenergy International number 6/2017.