Abundant opportunities in the European energy and environment industries

LONDON, Oct. 20, 2003 — Energy and environment industries in Europe are undergoing a paradigm change driven by the need to conserve power and manage wastes effectively.

National governments in the European Union are willing to commit themselves to investment and underline their ‘green’ credentials, leading to an increase in outsourcing and privatization of state-owned companies.

Implementation of strict environmental standards and legislation, coupled with technological advancements and a subsequent need to recoup investment, initiated the change that is likely to propel growth of these industries.

Frost & Sullivan (www.frost.com) is continuing intensive research to uncover new growth areas in the European energy and environment markets. The ongoing research process highlights the existing, as well as evolving market opportunities in a vast array of technologies.

Having generated European sales worth $104 million in 2002, the emerging energy storage solutions such as flywheels, supercapacitors and superconducting magnetic energy storage (SMES) systems have started to mount a serious challenge to traditional batteries. The quest for the ultimate low-emmisions, eco-car will stimulate sales of these emerging energy storage technologies that could be used with fuel cells that are ready for commercialisation.

Further, the conversion from the conventional 14-volt power generation and distribution system to the new 42-volt architecture is likely to drive widespread use of embryonic energy storage solutions. Governmental encouragement for greater investment in renewable energies and subsidies for power generated from clean sources is likely to heighten the appeal of these innovative storage technologies.

Growing interest in sustainable energy systems and rural electrification is driving a strong global push for hybrid power systems. A concerted effort to win projects from government organisations and incorporation of renewable energy technologies are the keys to success in this market. The pursuit of wider market opportunities is likely to attract new entrants into this sector, thus broadening the availability of capital for research and technology enhancement.

Biogas is a primary renewable energy source, yet its potential is barely touched and the market remains largely untapped. Plants for biogas production, usually through the process of anaerobic digestion (AD), are commercially available and installations are evident across the EU economies. AD techniques and the biogas industry can contribute to rural regeneration by creating and maintaining employment in local support businesses.

Strong emphasis on the waste hierarchy principle, favouring waste minimisation over disposal by re-using or recycling as well as thermal, biological and, as a last resort, landfill methods, are likely to brighten prospects for the European waste-to-energy plant market. A number of European countries have embraced waste-to-energy, with approximately 340 plants processing annual volumes of around 50 million tonnes of municipal waste in 2002; indicating the growth will be sustained throughout the coming decade, despite strong opposition from ‘NIMBY’ (Not In My Back Yard) campaigners.

About 166 plants are likely to be commissioned across Europe between 2003 and 2009, and the overall market is expected to be worth $313.6 million. The introduction of landfill bans to further improve rates of recycling — most prominently the adoption of the EU Landfill Directive — is poised to fuel growth.

The market is currently dominated by grate (mass burn) plants. It is anticipated that diversification of plant types and variations in sizes will be largely inspired by the robust growth rates expected from the emerging pyrolysis and gasification plants market and further development of the fluidised bed plant market. The competitive landscape comprises around 40 companies and CNIM/Martin is the undisputed market leader, followed by Foster Wheeler and VonRoll Inova.

Setting challenging national targets for the reduction of biodegradable waste, its pre-treatment prior to disposal, and strict regulatory controls associated with the EU Landfill Directive remain significant drivers of the European waste management services market. For instance, the shift from low-cost land filling to alternative disposal solutions is likely to further inject vigour into the European sludge disposal services market.

Thermal sludge treatment solutions are carving a niche for themselves as technologically driven waste management methods increasingly gain market acceptance. Thermal sludge-to-energy initiatives are generating additional revenue streams and the greatest progress is forecast in the smallest sector, biological treatment, whose market share is expected to rise by nearly 50 per cent.

Increasingly, integrated waste services are being sought, favouring multinational companies that are able to offer a complete range of waste services in addition to having expertise in more specific sectors, such as incineration. French contractors Sita and Onyx are the clear titans of the MSW services market with their ability to deliver bespoke and specialist services if required. Trailing behind are companies such as RWE as well as Rethmann and Shanks, who have chosen a more limited focus on particular services.

Another technology with growing acceptance is that of membrane bioreactors (MBR), an outcome of the escalating interest in water re-use and recycling technology and increasing demand for advanced wastewater treatment solutions. Although currently at the development to growth stage of its lifecycle, this market affords considerable opportunities for existing as well as new participants.

Zenon and Kubota stand out as the most important and influential industry participants. The main technologies in this market are largely based around Kubota’s submerged flat sheet technology and Zenon’s hollow fibre configuration, although other companies such as Norit X-Flow and Wehrle Werk now offer their own proprietary membranes.

Strict European regulations such as the Urban Wastewater Treatment Directive (UWWT), which has a 2005 deadline, are expected to spur continued investment in wastewater treatment works by small and mid-sized municipalities. Among other applications, landfill leachate is especially promising, with reference plants in Germany, France and Holland leading the way. Anticipated regulations along with existing environmental policies are spurring the maritime industry to strongly consider MBR technology as a way of achieving zero untreated liquid discharge.

Amid growing opportunities, the differences between countries on cultural dimensions, particularly apparent in France, Germany and the alpine region, pose great difficulties for multinational companies seeking entry in the European markets. Sustained public relations initiatives are required to create awareness among end users and key stake holders to overcome these market barriers.

Frost & Sullivan works closely with its global clients to assist them in developing appropriate growth strategies, having understood the importance of operating according to local market needs and characteristics. Dedicated analyst teams for every vertical/market segment, and a new look Web site offers real-time monitoring of industries, enabling clients to keep abreast of latest market developments.

Companies can make the most of Frost & Sullivan’s vast database and unlimited access to proprietary insights, quality information, and strategic recommendations provided by market visionaries to overcome cross-cultural challenges and emerge as a key market participant in their respective market segments.

Frost & Sullivan, an international growth consultancy, has been supporting clients’ expansion for more than four decades. Its market expertise covers a broad spectrum of industries, while our portfolio of advisory competencies include custom strategic consulting, market intelligence and management training.


Frost & Sullivan
Nuha Kadri, 210-247-2440
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