Released October 23, 2017 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Call 2017 the pause before the surge for North American Electric Power developers, who are expected to begin construction on about 27,722 megawatts (MW) of new generating capacity in the U.S. and Canada this year, a modest gain over construction starts in 2016. But in 2018 and 2019, developers are scheduled to begin building far more power plants in North America--about 50,000 MW in 2018 and 48,000 MW in 2019.
"But there's a lot that can happen between a project announcement and the start of construction," said Britt Burt, Industrial Info's vice president of research for the Global Power Industry, to about 500 attendees at the company's 2018 Industrial Market Outlook, held October 12 in Baton Rouge, Louisiana. "Developers are an optimistic group. But based on our experience, we don't expect all of these projects to begin construction according to their current timetables."
In 2018 and 2019, natural gas-fired power plants will account for about 36,374 MW of new construction project starts, Burt continued. That amounts to about 37% of all new power projects scheduled to begin construction during those two years. But developers have scheduled the start of many more renewable energy projects during that same time. Developers plan to begin constructing about 54,855 MW of new renewable-energy generation capacity during the same two-year period, an amount equal to about 56% of all new-build construction starts scheduled for that time.
"What we say about projects kicking off on schedule applies twice over for renewable energy projects," Burt told attendees at the October 12 briefing. "Historically, gas-fired power projects have a higher likelihood of starting and finishing construction on time than renewable-energy projects. Even so, the shift from gas-fired new-build generation to renewable energy is notable."
Federal policy is influencing when some developers plan to start construction. In late 2015, when the U.S. Congress last extended federal tax credits for renewable energy, it incented renewable-energy developers to get steel into the ground sooner rather than later. Federal protection tax credits (PTCs) for the wind industry decline by 20% per year over a five-year period, eventually disappearing in 2020. Investment tax credits (ITCs) for solar power also decline, but over a different schedule. According to the Solar Energy Industries Association (SEIA) (Washington, D.C.), solar ITCs will remain steady at 30% through the end of 2019, then fall to 26% in 2020 and 22% in 2021 before dropping permanently in 2022 to 10% for commercial projects and 0% for residential projects. For more on Congress' extension of the PTCs and ITCs, see December 21, 2015, article - Renewable, Alternative Energy Industries Cheer Extensions of Tax Credits.
State support for renewable energy and continued declines in costs also are boosting the prospects for renewable generation. For more on that, see October 10, 2017, article - Plans for Windfarms Sprout in Midwest, Southwest. Could Costs Fall Further? and May 22, 2017, article - The Price is Right: Solar Surge Driven by Declining Panel Prices.
Turning to the U.S. Gulf Coast region, Burt said Industrial Info is tracking 149 capital projects valued at $14.95 billion that are scheduled to begin construction between now and the end of 2020. A further 168 maintenance projects worth $679 million also are scheduled to start construction during that time.
Burt also said that nearly 1,000 transmission and distribution (T&D) projects valued at roughly $60 billion are seen as highly probable to begin construction across the U.S. and Canada between 2017 and 2020. The regions with the most active planned construction starts include the Rocky Mountains ($15.9 billion), New England ($7.2 billion), West Coast ($6.1 billion) and Southwest ($5.5 billion).
Across the U.S. and Canada, Industrial Info is tracking about $38.3 billion of in-plant capital projects scheduled to begin between 2017 and 2020, Burt said in Baton Rouge. That work includes installing environmental equipment, modernizing plants, repowering power plants, plant closures and other types of work. Industrial Info considers about 327 of those projects, valued at about $25.9 billion, to have a high probability of getting funded and started.
"Our Power Industry research confirms the industry is continuing its strategic transformation," Burt told event attendees. "In the not-too-distant past, we were tracking billions of dollars of North American project spending for coal-fired and nuclear generation, but coal and nuclear have become the victims of an industry undergoing fundamental change. Investment in the coal and nuclear sectors now is mainly limited to spending on in-plant capital and maintenance projects."
In addition to the fuel wars being won by renewable energy and natural gas-fired generation, Burt identified several other strategic trends that are in the early stages of shaping the Power Industry, including:
The most active areas for IEP development are British Columbia, Alberta and Louisiana. The industries most actively investing in IEPs are Oil & Gas Production, Metals & Minerals, Industrial Manufacturing, Pulp, Paper & Wood and Chemical Processing.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
"But there's a lot that can happen between a project announcement and the start of construction," said Britt Burt, Industrial Info's vice president of research for the Global Power Industry, to about 500 attendees at the company's 2018 Industrial Market Outlook, held October 12 in Baton Rouge, Louisiana. "Developers are an optimistic group. But based on our experience, we don't expect all of these projects to begin construction according to their current timetables."
In 2018 and 2019, natural gas-fired power plants will account for about 36,374 MW of new construction project starts, Burt continued. That amounts to about 37% of all new power projects scheduled to begin construction during those two years. But developers have scheduled the start of many more renewable energy projects during that same time. Developers plan to begin constructing about 54,855 MW of new renewable-energy generation capacity during the same two-year period, an amount equal to about 56% of all new-build construction starts scheduled for that time.
"What we say about projects kicking off on schedule applies twice over for renewable energy projects," Burt told attendees at the October 12 briefing. "Historically, gas-fired power projects have a higher likelihood of starting and finishing construction on time than renewable-energy projects. Even so, the shift from gas-fired new-build generation to renewable energy is notable."
Federal policy is influencing when some developers plan to start construction. In late 2015, when the U.S. Congress last extended federal tax credits for renewable energy, it incented renewable-energy developers to get steel into the ground sooner rather than later. Federal protection tax credits (PTCs) for the wind industry decline by 20% per year over a five-year period, eventually disappearing in 2020. Investment tax credits (ITCs) for solar power also decline, but over a different schedule. According to the Solar Energy Industries Association (SEIA) (Washington, D.C.), solar ITCs will remain steady at 30% through the end of 2019, then fall to 26% in 2020 and 22% in 2021 before dropping permanently in 2022 to 10% for commercial projects and 0% for residential projects. For more on Congress' extension of the PTCs and ITCs, see December 21, 2015, article - Renewable, Alternative Energy Industries Cheer Extensions of Tax Credits.
State support for renewable energy and continued declines in costs also are boosting the prospects for renewable generation. For more on that, see October 10, 2017, article - Plans for Windfarms Sprout in Midwest, Southwest. Could Costs Fall Further? and May 22, 2017, article - The Price is Right: Solar Surge Driven by Declining Panel Prices.
Turning to the U.S. Gulf Coast region, Burt said Industrial Info is tracking 149 capital projects valued at $14.95 billion that are scheduled to begin construction between now and the end of 2020. A further 168 maintenance projects worth $679 million also are scheduled to start construction during that time.
Burt also said that nearly 1,000 transmission and distribution (T&D) projects valued at roughly $60 billion are seen as highly probable to begin construction across the U.S. and Canada between 2017 and 2020. The regions with the most active planned construction starts include the Rocky Mountains ($15.9 billion), New England ($7.2 billion), West Coast ($6.1 billion) and Southwest ($5.5 billion).
Across the U.S. and Canada, Industrial Info is tracking about $38.3 billion of in-plant capital projects scheduled to begin between 2017 and 2020, Burt said in Baton Rouge. That work includes installing environmental equipment, modernizing plants, repowering power plants, plant closures and other types of work. Industrial Info considers about 327 of those projects, valued at about $25.9 billion, to have a high probability of getting funded and started.
"Our Power Industry research confirms the industry is continuing its strategic transformation," Burt told event attendees. "In the not-too-distant past, we were tracking billions of dollars of North American project spending for coal-fired and nuclear generation, but coal and nuclear have become the victims of an industry undergoing fundamental change. Investment in the coal and nuclear sectors now is mainly limited to spending on in-plant capital and maintenance projects."
In addition to the fuel wars being won by renewable energy and natural gas-fired generation, Burt identified several other strategic trends that are in the early stages of shaping the Power Industry, including:
- Mounting interest in micro grids by industrial, commercial, government and educational concerns
- Rising investment in energy storage technologies
- Continuing growth of distributed generation
- Growing investments in combined heat and power (CHP)
- Ongoing investment in developing small modular reactors (SMR), with an eye to deploying them in the next decade
The most active areas for IEP development are British Columbia, Alberta and Louisiana. The industries most actively investing in IEPs are Oil & Gas Production, Metals & Minerals, Industrial Manufacturing, Pulp, Paper & Wood and Chemical Processing.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
