The 21st-century commercialisation of the aerogel industry has been extensively discussed, but despite the excitement and huge potential, it is still a long way from plain sailing for the manufacturers, says Dr Richard Collins, Technology Analyst at IDTechEx.
Diversification becomes essential for the aerogel industry
Looking back on the failed commercial aerogel attempts in the 20th century, such as those from Monsanto in the 40s and BASF in the 80s, it is easy to see that this industry can quickly decline.
Advanced manufacturing procedures, greater awareness, and novel composite and polymeric materials have all helped the aerogel industry to reach a previously unreached level of maturity. However, the industry needs to diversify to thrive.
At present, the majority of business comes from the oil and gas sector. These use silica composite blankets for insulative purposes from refineries to subsea pipelines. The combination of properties: lightweight, hydrophobic, highly thermal insulative, and more make this material the perfect choice – see our previous article about how aerogel products are answering industries toughest questions. Like all emerging materials, aerogel products are not cheap compared to the incumbent and have somewhat depended on the previously deep pockets (and high requirements) of this sector to grow.
It is perhaps an understatement to say that the peak of the oil and gas industry is behind us, and that this sector cannot be guaranteed to pull in the same revenue looking forward as it has looking back. A clear and worrying parallel can be drawn between the stock price of the market leader, Aspen Aerogel (ASPN), and the performance of crude oil (see chart above). At the end of last year, Aspen Aerogel announced a delay on building their second manufacturing plant, which in part can be attributed to these challenges as they “better pace the project against our assessment of demand for the 2018-2020 timeframe”. In the first quarter this year they announced a nearly $10m revenue decrease versus last year’s first quarter mainly due to “lower activity levels in the subsea market”.
Image (top): The orange line represents the oil industry (Bloomberg WTI Crude Oil Subindex) and the blue line represents Aspen Aerogel stock price (ASPN). Source: Financial Times
The key to survival is to diversify and expand into emerging applications; this will reduce the dependence on the cost and performance of oil and gas. The applications already gaining some prominence are insulation for industrial needs, building and construction, and district energy. Getting only a small piece of these large pies will not just mean survival, but great success for the manufacturers, and the sooner it happens the better.
Looking further ahead, the attention that aerogels have received is ever-increasing and there are exciting roles that are yet to be even partially exploited. These include electrical systems, aerospace, packaging, cosmetics, and apparel just to name a few. As a result, this market has a great potential and has the possibility to diversify further still down the road. See a previous article for more on these new directions.
IDTechEx remain at the forefront of analysing the aerogel market and have provided an updated forecast that reflects these opportunities and the challenges faced, the market is expected to reach $910m by 2027. The essential diversification is predicted to occur within the next decade and is reflected in the infographic below. To see the full analysis, see the IDTechEx report at www.IDTechEx.com/aerogel.
Global aerogel application forecast by industry sector. Source: IDTechEx Research report 'Aerogels 2017-2027: Technologies, Markets and Players' (www.IDTechEx.com/aerogel)
Marketing Manager, Reports
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