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Researched by Industrial Info Resources (Sugar Land, Texas)--The ascendancy of the Trump Administration has given U.S. power producers cause for hope, even as the transformation of the industry toward natural gas and renewables is in full swing, said Britt Burt, Industrial Info's Vice President of Global Power Industry Research, at Industrial Info's Industrial Market Outlook for 2017.
"My favorite question that I get constantly is, what effect the new Trump Administration will have on the power industry," Burt said at the Houston, Texas, event on Tuesday. "I can tell you there seems to be a new wave of optimism throughout the industry."
At the same time, he added, "We can certainly see the transformation of the industry taking place right before our eyes," as natural gas and renewable assume primacy in new-build construction over coal and nuclear power.
Natural gas became the dominate fuel source for the power industry last year, Burt said, ranging from 33% to 38% in the overall fuel mix. At the same time, coal fell to as low as 28%.
The future energy mix is "really sensitive to natural gas prices as well as the demand for electricity," he continued. The industry has been in a period of slow demand growth, brought about in part by energy efficiency programs, as well as the slow recovery of the U.S. economy. However, an upturn in economic growth, particularly for housing starts, automotive manufacturing and steel production, could result in a jump in power demand.
Industrial Info is tracking well over 200 new-build, natural gas power projects worth about $87 billion that could start construction in the 2017-2020 period, totaling about 80 gigawatts. "Out of this total, out of the larger pipeline I've been talking about, we see about 37 of those proposed by utility companies, about 137 of those proposed by private energy producers and 85 from industry energy producers -- major industrial sites like refineries and chemical plants, food and beverage plants and things of that nature that are choosing to move to on-site generation," Burt said.
Industrial Info is also tracking more than 800 renewable power projects, worth $220 billion, with construction starts between 2017 and 2020, Burt said, but added, "I don't see that happening at all."
Many of the renewable energy projects are competing against each other, and as a result many will be put aside or shoved into future years. Industrial Info's confidence factor in the likelihood of renewable energy projects actually moving forward ranges from 28% to 47%.
"So we see a lot of fall-out and a lot of pushout on these projects. But I think it [renewable project construction starts] is going to continue over the next three or four years to be a major factor for the power industry," Burt said.
Click the image at right for a graph showing North American Power Industry Unit Construction Starts for 2010-2017.
He added he does not think the Trump Administration will immediately roll back the renewable energy tax credits, which have fueled much of the growth. However, if the Trump Administration reduces the corporate tax rate from 35% to as low as 15%, "I think the tax credits will go away."
Burt said the controversial Clean Power Plan, which would require power plant operators to sharply reduce carbon dioxide emissions, stands little chance of surviving in the Trump Administration. The plan is currently being challenged in the U.S. Supreme Court.
Even so, closures of existing power units will continue as a result of other environmental requirements and additional factors. Well over 1,100 power units representing 105 gigawatts were retired from 2010 through 2016, and 271 units, representing 47 gigawatts, are scheduled for closing during the 2017-2020 period.
Capital expenditures for coal-fired and nuclear plants will be centered on modernizations and life extensions, Burt said. Coal-fired power generation may be diminished, but is certainly not going away, being seen as retaining roughly a 30% share of the overall power fuel mix in the U.S. until at least 2030.
"So even though we are not going out and building big, huge magnificent coal-fired power plants, we still see quite a bit of investment there," Burt said. "Here you see $9.5 billion that is earmarked for the next three years, 2017 to 2020, and so I think we are going to see this grow and increase as we go forward."
Nuclear power has also been challenged in deregulated markets due to low natural gas prices, making it difficult for operators to remain competitive and even profitable, "so we've seen some closures of nuclear assets and I think there are more on the horizon," he continued. However, states such as New York and Illinois have taken steps to shore up their nuclear sectors "because it is such a major piece of the backbone for our baseload capacity in the country.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 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/.
"My favorite question that I get constantly is, what effect the new Trump Administration will have on the power industry," Burt said at the Houston, Texas, event on Tuesday. "I can tell you there seems to be a new wave of optimism throughout the industry."
At the same time, he added, "We can certainly see the transformation of the industry taking place right before our eyes," as natural gas and renewable assume primacy in new-build construction over coal and nuclear power.
Natural gas became the dominate fuel source for the power industry last year, Burt said, ranging from 33% to 38% in the overall fuel mix. At the same time, coal fell to as low as 28%.
The future energy mix is "really sensitive to natural gas prices as well as the demand for electricity," he continued. The industry has been in a period of slow demand growth, brought about in part by energy efficiency programs, as well as the slow recovery of the U.S. economy. However, an upturn in economic growth, particularly for housing starts, automotive manufacturing and steel production, could result in a jump in power demand.
Industrial Info is tracking well over 200 new-build, natural gas power projects worth about $87 billion that could start construction in the 2017-2020 period, totaling about 80 gigawatts. "Out of this total, out of the larger pipeline I've been talking about, we see about 37 of those proposed by utility companies, about 137 of those proposed by private energy producers and 85 from industry energy producers -- major industrial sites like refineries and chemical plants, food and beverage plants and things of that nature that are choosing to move to on-site generation," Burt said.
Industrial Info is also tracking more than 800 renewable power projects, worth $220 billion, with construction starts between 2017 and 2020, Burt said, but added, "I don't see that happening at all."
Many of the renewable energy projects are competing against each other, and as a result many will be put aside or shoved into future years. Industrial Info's confidence factor in the likelihood of renewable energy projects actually moving forward ranges from 28% to 47%.
"So we see a lot of fall-out and a lot of pushout on these projects. But I think it [renewable project construction starts] is going to continue over the next three or four years to be a major factor for the power industry," Burt said.
Click the image at right for a graph showing North American Power Industry Unit Construction Starts for 2010-2017.He added he does not think the Trump Administration will immediately roll back the renewable energy tax credits, which have fueled much of the growth. However, if the Trump Administration reduces the corporate tax rate from 35% to as low as 15%, "I think the tax credits will go away."
Burt said the controversial Clean Power Plan, which would require power plant operators to sharply reduce carbon dioxide emissions, stands little chance of surviving in the Trump Administration. The plan is currently being challenged in the U.S. Supreme Court.
Even so, closures of existing power units will continue as a result of other environmental requirements and additional factors. Well over 1,100 power units representing 105 gigawatts were retired from 2010 through 2016, and 271 units, representing 47 gigawatts, are scheduled for closing during the 2017-2020 period.
Capital expenditures for coal-fired and nuclear plants will be centered on modernizations and life extensions, Burt said. Coal-fired power generation may be diminished, but is certainly not going away, being seen as retaining roughly a 30% share of the overall power fuel mix in the U.S. until at least 2030.
"So even though we are not going out and building big, huge magnificent coal-fired power plants, we still see quite a bit of investment there," Burt said. "Here you see $9.5 billion that is earmarked for the next three years, 2017 to 2020, and so I think we are going to see this grow and increase as we go forward."
Nuclear power has also been challenged in deregulated markets due to low natural gas prices, making it difficult for operators to remain competitive and even profitable, "so we've seen some closures of nuclear assets and I think there are more on the horizon," he continued. However, states such as New York and Illinois have taken steps to shore up their nuclear sectors "because it is such a major piece of the backbone for our baseload capacity in the country.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 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/.
