Released June 07, 2021 | SUGAR LAND
en
Researched by Industrial Info Resources (Sugar Land, Texas)--Driven by its ongoing transformation, spending in the Power Industry is expected to remain strong for 2021-2022 and beyond. Industrial Info's recently released North American Market Assessment offers great insight into key trends that are expected to drive investment for some time to come.
Click here for more information on the 2021 North American Power Industry Outlook.
The overall theme of the industry will be decarbonization. In its earliest days, President Joe Biden's administration committed to rejoining the Paris Climate Accord to reduce carbon emissions and global temperatures. As part of this movement, Biden is pushing for the U.S. to be at zero net carbon emissions by 2035. If the target holds true, it will drive healthy spending on renewable energy for the next decade. Canada is on a similar path to decarbonize in a rather rapid fashion.
For both the U.S. and Canada, new electricity demand has been flat for at least a decade. Last year saw an even bigger dip in electricity demand, driven by the challenges surrounding the COVID-19 pandemic. However, electricity demand already has risen for 2021, and we expect to see some modest growth for the short term, with the possibility of a further increase as more electrification measures are implemented. As it stands, we anticipate project starts for the U.S. and Canadian Power Industry will represent a total installed value of more than $62 billion, with 2022 showing an increase over 2021.
Click on the image at right for a graph showing future U.S. and Canadian Power Industry project kickoffs by market region.
Retirements of coal-fired power plants are expected to slow in 2021 when compared with previous years, but it is anticipated the pace will increase in 2022. Overall, we anticipate another 35 gigawatts of coal-fired capacity to be retired by the end of 2025, and even more through 2030. This year is expected to offset a record for nuclear capacity retirements. We are expecting older, less efficient natural gas-fired capacity to be retired as well.
Spending activity in the Power Industry will be led by investment in new and expanded wind and solar fields. This is being driven by the extension of the Production Tax Credits for onshore wind and the Investment Tax Credit for solar, as well as a new Investment Tax Credit for offshore wind. There is pending legislation to extend these tax credits for multiple years through the decade.
Wind is expected to account for most of the growth in the renewables sector through 2024. However, project kickoffs for new renewable energy projects over the coming years are expected to see solar outpace other energy sources. There are tax credits in place to encourage development of wind, solar and geothermal power plants on public lands beginning in 2025. The hydroelectric sector offers significant potential for development across the U.S., but wind and solar are the favored choices in regards to cost and scheduling. Canada will continue to rely on hydro as a key energy source for electricity moving forward.
Battery storage has been gaining ground in terms of overall spending, a trend we expect to see continue for quite some time. In order to meet the Biden administration's goal for zero carbon emissions by 2035, there will need to be extensive investment in this area. Recently proposed tax credits would benefit stand-alone battery storage sites and more on the horizon.
New and expanded capacity in the natural gas-fired sector slowed in 2020, when compared with previous years, due in part to project delays related to the COVID-19 pandemic. More importantly, gas-fired generation has been built to replace much of the coal-fired generation that has been retired. This peaked in 2018 and 2019, when natural gas-fired generation was needed to fill the gaps.
The potential for more natural gas-fired generation is promising over the next few years, but it remains unknown how large of a role hydrogen will play and how soon will it make a significant impact. There are a number of natural gas projects in various stages of development across the U.S., where hydrogen is anticipated to supply 30% of the fuel mix as early as 2023-2025. Long-range plans are to increase the amount of hydrogen as a fuel source over the next decade.
Needless to say, the prospects for new coal-fired capacity in the U.S. and Canada are non-existent. Spending in this sector will focus on in-plant capital expenditures, including equipment replacements, environmental compliance, refurbishments and maintenance activity. On the environmental side, a number of carbon-capture projects are in development at existing coal-fired power plants. This is a trend that has some potential to grow over time, as Section 45Q tax credits have been extended as well.
The first nuclear unit in the U.S. for several years could begin commercial operations in 2021. Vogtle Unit 3 is expected to begin commercial operations later this year, and Vogtle Unit 4 is slated to begin commercial operations in 2022.
While development of conventional nuclear power plants seems to be unlikely for the near future, the prospect of developing small modular reactors seems promising. There are a number of U.S. sites being considered for these projects. Canada is performing a 27-point action plan to develop small modular reactors. Canada is planning to modernize its existing nuclear fleet to extend the operational life of its units. The U.S. is seeing two active relicense proposals move forward, with the potential for more.
Despite the ongoing transformation of the Power Industry, the prospects for investment in the U.S. and Canada are expected to be healthy for 2021-2022 and beyond.
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.
Click here for more information on the 2021 North American Power Industry Outlook.
The overall theme of the industry will be decarbonization. In its earliest days, President Joe Biden's administration committed to rejoining the Paris Climate Accord to reduce carbon emissions and global temperatures. As part of this movement, Biden is pushing for the U.S. to be at zero net carbon emissions by 2035. If the target holds true, it will drive healthy spending on renewable energy for the next decade. Canada is on a similar path to decarbonize in a rather rapid fashion.
For both the U.S. and Canada, new electricity demand has been flat for at least a decade. Last year saw an even bigger dip in electricity demand, driven by the challenges surrounding the COVID-19 pandemic. However, electricity demand already has risen for 2021, and we expect to see some modest growth for the short term, with the possibility of a further increase as more electrification measures are implemented. As it stands, we anticipate project starts for the U.S. and Canadian Power Industry will represent a total installed value of more than $62 billion, with 2022 showing an increase over 2021.
Retirements of coal-fired power plants are expected to slow in 2021 when compared with previous years, but it is anticipated the pace will increase in 2022. Overall, we anticipate another 35 gigawatts of coal-fired capacity to be retired by the end of 2025, and even more through 2030. This year is expected to offset a record for nuclear capacity retirements. We are expecting older, less efficient natural gas-fired capacity to be retired as well.
Spending activity in the Power Industry will be led by investment in new and expanded wind and solar fields. This is being driven by the extension of the Production Tax Credits for onshore wind and the Investment Tax Credit for solar, as well as a new Investment Tax Credit for offshore wind. There is pending legislation to extend these tax credits for multiple years through the decade.
Wind is expected to account for most of the growth in the renewables sector through 2024. However, project kickoffs for new renewable energy projects over the coming years are expected to see solar outpace other energy sources. There are tax credits in place to encourage development of wind, solar and geothermal power plants on public lands beginning in 2025. The hydroelectric sector offers significant potential for development across the U.S., but wind and solar are the favored choices in regards to cost and scheduling. Canada will continue to rely on hydro as a key energy source for electricity moving forward.
Battery storage has been gaining ground in terms of overall spending, a trend we expect to see continue for quite some time. In order to meet the Biden administration's goal for zero carbon emissions by 2035, there will need to be extensive investment in this area. Recently proposed tax credits would benefit stand-alone battery storage sites and more on the horizon.
New and expanded capacity in the natural gas-fired sector slowed in 2020, when compared with previous years, due in part to project delays related to the COVID-19 pandemic. More importantly, gas-fired generation has been built to replace much of the coal-fired generation that has been retired. This peaked in 2018 and 2019, when natural gas-fired generation was needed to fill the gaps.
The potential for more natural gas-fired generation is promising over the next few years, but it remains unknown how large of a role hydrogen will play and how soon will it make a significant impact. There are a number of natural gas projects in various stages of development across the U.S., where hydrogen is anticipated to supply 30% of the fuel mix as early as 2023-2025. Long-range plans are to increase the amount of hydrogen as a fuel source over the next decade.
Needless to say, the prospects for new coal-fired capacity in the U.S. and Canada are non-existent. Spending in this sector will focus on in-plant capital expenditures, including equipment replacements, environmental compliance, refurbishments and maintenance activity. On the environmental side, a number of carbon-capture projects are in development at existing coal-fired power plants. This is a trend that has some potential to grow over time, as Section 45Q tax credits have been extended as well.
The first nuclear unit in the U.S. for several years could begin commercial operations in 2021. Vogtle Unit 3 is expected to begin commercial operations later this year, and Vogtle Unit 4 is slated to begin commercial operations in 2022.
While development of conventional nuclear power plants seems to be unlikely for the near future, the prospect of developing small modular reactors seems promising. There are a number of U.S. sites being considered for these projects. Canada is performing a 27-point action plan to develop small modular reactors. Canada is planning to modernize its existing nuclear fleet to extend the operational life of its units. The U.S. is seeing two active relicense proposals move forward, with the potential for more.
Despite the ongoing transformation of the Power Industry, the prospects for investment in the U.S. and Canada are expected to be healthy for 2021-2022 and beyond.
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.
