Frost: Demand for Clean, Stable Process Heat Energy Fuels Adoption of Industrial Boilers

April 21, 2008 // Published as a news service by IHS

According to Frost & Sullivan, this demand for process heat and electricity could encourage industries to invest in industrial boilers, instead of depending on utility grids, which could be unstable in some Southeast Asian countries.

Recent analysis from Frost & Sullivan of the Southeast Asian industrial boilers markets found earned revenues of $252.2 million in 2006, with estimates to reach $382.6 million in 2013.

The market growth of each country in Southeast Asia may vary depending on the country's industrial policy, existing tariff structure, maturity of technology, power availability and fuel resources.

Analysts said the keen focus of industries, such as food and beverages, manufacturing, plastics, rubber, pharmaceuticals, automobiles and petrochemicals, on improving energy efficiency strategies has significantly benefited the industrial boilers market.

The market is highly competitive because of the presence of numerous multinational and local equipment suppliers, analysts said. Most local manufacturers enjoy immense popularity, especially among the price-sensitive small and medium-sized companies.

Although some local companies also import low cost equipment from China, end-users prefer companies with local manufacturing bases, as it eliminates red tape. Analysts said the strong presence of local suppliers even curtails the expansion plans of multinationals, which are preferred only by companies with critical applications.

"Most local manufacturers partner with or license the technology of industrial boilers from well-known European and U.S.-based multinational equipment suppliers," said Frost & Sullivan industry analyst Suchitra Sriram. "Market participants will also gain from strong support for cogeneration power plants and by selling the surplus power generated to the local utility grid at attractive prices."

Meanwhile, rising concerns about the environment have created a demand for environment-friendly power generation technologies in the industrial boiler market. Analysts said this trend is expected to trigger wider adoption of clean fuels, such as biomass and biogas.

Increasing oil and gas prices are also causing a shift in focus from conventional fuels to greener ones, analysts said. The abundance of biomass in agro-based countries, such as the Philippines, only enhances the demand for biomass boilers.

"Industries' move to retrofit coal and oil-fired boilers with biomass boilers and replace old packaged boilers with new ones have given a huge boost to the market," said Sriram. "These changes are in line with the governments' visions of environmental awareness and promotion of green energy technology."

The governments' favorable import laws have also gone a long way in driving uptake of industrial boilers, analysts said, despite the slowdown in industrial development in Southeast Asia.

Analysts said the import laws for industrial equipment in Malaysia, for example, are simple, thereby facilitating the expansion of the market. In Thailand, the import tariff on boilers and boiler parts is only 5%.

These laws also enable local manufacturers to import technologically advanced machinery from suppliers in Japan, Germany and Belgium, analysts said. They can also collaborate with multinational companies to gain technical expertise, thereby offering boilers with higher efficiencies and better output.

Source: Frost & Sullivan.