Released January 27, 2020 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The shifting dynamics of the North American Electric Power Industry are reflected in the industry's future investment plans, Britt Burt, Industrial Info's vice president of global research for the Power Industry, told nearly 1,500 attendees at Industrial Info's 2020 Industrial Market Outlook on January 23 in Houston, Texas.
Across North America, developers plan to begin construction of about 62,000 megawatts (MW) of new wind and solar generation capacity over the next two years, split evenly between the two types of technologies, Burt said. By contrast, only about 19,000 MW of new gas-fired generation is expected to break ground by yearend 2021, he added.
Roughly $350 billion of new power capital projects are scheduled to begin construction over the next two years in the U.S., Canada and Mexico. Industrial Info believes two-thirds of those projects, about $199 billion, have a medium-to-high probability of turning dirt according to their schedule.
Burt told attendees that the North American regions with the greatest dollar value of power projects with a medium-to-high probability of beginning construction by yearend 2021 include:
"There's a lower level of capital construction activity than in years past because electric load growth is negligible for most regions, in large part because utility energy-efficiency programs are holding down customer demand growth," Burt said. "What new generation that is getting built is renewable, for the most part, because federal and state policies encourage it and because costs continue to decline."
He added that the cost to build a battery energy storage system (BESS) has been declining, and further declines are expected. He sees BESS as a driver that supports continued growth of renewable energy.
Burt said there is an "ever-diminishing appetite for fossil-fueled electricity," despite low current fuel costs. State utility regulators and elected officials have been turning against gas generation in an effort to lower carbon dioxide (CO2) emissions and thus fight global warming. Although gas has about half the carbon content of coal, continued improvements in the cost competitiveness of renewable generation, plus political support for renewables, have worked against new-build gas-fired generation.
Asset owners are expected to retire about 8,000 MW of coal-fired generation in 2020, about half of what they retired in 2019, Burt said. He added he expected retirements to fall to less than 2,000 MW next year before shooting up to about 9,300 MW in 2022.
Less well-publicized has been the retirement of gas-fueled power plants across North America. Retirements peaked in 2018 at about 9,400 MW before falling to about 2,450 MW in 2019. This year, about 6,300 MW of gas-fueled generation is expected to be closed.
Coal-fired power plant retirements totaled about 98,000 MW over the 2010-2019 period. Over the 2020-2030 period, those retirements are expected to slow to about 59,000 MW. By contrast, about 49,000 MW of gas-fired generation was retired over 2010-2019, and another 14,000 MW are expected to close between 2020 and 2030. Of the units that closed between 2010 and 2019, most -- around 34,000 MW -- were older, less efficient, steam-turbine units. Many of these units had been coal-fired and were converted to burn gas, but the low efficiencies of those plants made them vulnerable to closure.
Click on the image at right to see power plant retirements, by fuel, across North America for 2010-2019, and projected retirements 2020-2030.
Burt predicted the retirements of coal and nuclear units would continue, caught between renewable energy and gas-fired generation. The project opportunities that exist in the coal and nuclear sectors are expected to be limited to maintenance and in-plant capital improvements. Asset owners have shifted their maintenance spending due to retirements of coal and nuclear units.
In contrast to new-build projects, North American asset owners have announced plans to invest about $27 billion in in-plant capital projects like life extensions, modernizations, refurbishments and environmental retrofits. Burt said about $24 billion of those projects have a medium-to-high probability of kicking off according to their current schedules.
Click on the image at right to see a pie chart of planned spending for North American power plant in-plant capital upgrades for 2020-2021.
Spending on transmission & distribution (T&D) projects is expected to be heaviest over the 2020-2021 period in New York, Texas, California, Ontario and Wyoming, Burt said, adding that projects totaling about $15 billion are scheduled to begin construction in those five states over the next two years.
Spending on industrial energy projects also is expected to be robust over the next two years: nearly 900 projects valued at more than $23 billion are expected to begin construction by yearend 2021. The Industrial Manufacturing sector is expected to lead the way with 268 industrial energy projects totaling over $11 billion in value. Most of that work will involve expansion of existing plants. After Industrial Manufacturing, the Metals & Minerals Industry is expected to break ground on about $4 billion of industrial energy projects by the end of 2021.
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.
Across North America, developers plan to begin construction of about 62,000 megawatts (MW) of new wind and solar generation capacity over the next two years, split evenly between the two types of technologies, Burt said. By contrast, only about 19,000 MW of new gas-fired generation is expected to break ground by yearend 2021, he added.
Roughly $350 billion of new power capital projects are scheduled to begin construction over the next two years in the U.S., Canada and Mexico. Industrial Info believes two-thirds of those projects, about $199 billion, have a medium-to-high probability of turning dirt according to their schedule.
Burt told attendees that the North American regions with the greatest dollar value of power projects with a medium-to-high probability of beginning construction by yearend 2021 include:
- Mexico ($38.3 billion)
- Rocky Mountains ($23.6 billion)
- Southwest ($19.6 billion)
- West Coast ($18.3 billion)
- Mid-Atlantic ($17.6 billion)
- Great Lakes ($16.4 billion)
- Ontario ($14 billion)
"There's a lower level of capital construction activity than in years past because electric load growth is negligible for most regions, in large part because utility energy-efficiency programs are holding down customer demand growth," Burt said. "What new generation that is getting built is renewable, for the most part, because federal and state policies encourage it and because costs continue to decline."
He added that the cost to build a battery energy storage system (BESS) has been declining, and further declines are expected. He sees BESS as a driver that supports continued growth of renewable energy.
Burt said there is an "ever-diminishing appetite for fossil-fueled electricity," despite low current fuel costs. State utility regulators and elected officials have been turning against gas generation in an effort to lower carbon dioxide (CO2) emissions and thus fight global warming. Although gas has about half the carbon content of coal, continued improvements in the cost competitiveness of renewable generation, plus political support for renewables, have worked against new-build gas-fired generation.
Asset owners are expected to retire about 8,000 MW of coal-fired generation in 2020, about half of what they retired in 2019, Burt said. He added he expected retirements to fall to less than 2,000 MW next year before shooting up to about 9,300 MW in 2022.
Less well-publicized has been the retirement of gas-fueled power plants across North America. Retirements peaked in 2018 at about 9,400 MW before falling to about 2,450 MW in 2019. This year, about 6,300 MW of gas-fueled generation is expected to be closed.
Coal-fired power plant retirements totaled about 98,000 MW over the 2010-2019 period. Over the 2020-2030 period, those retirements are expected to slow to about 59,000 MW. By contrast, about 49,000 MW of gas-fired generation was retired over 2010-2019, and another 14,000 MW are expected to close between 2020 and 2030. Of the units that closed between 2010 and 2019, most -- around 34,000 MW -- were older, less efficient, steam-turbine units. Many of these units had been coal-fired and were converted to burn gas, but the low efficiencies of those plants made them vulnerable to closure.
Burt predicted the retirements of coal and nuclear units would continue, caught between renewable energy and gas-fired generation. The project opportunities that exist in the coal and nuclear sectors are expected to be limited to maintenance and in-plant capital improvements. Asset owners have shifted their maintenance spending due to retirements of coal and nuclear units.
In contrast to new-build projects, North American asset owners have announced plans to invest about $27 billion in in-plant capital projects like life extensions, modernizations, refurbishments and environmental retrofits. Burt said about $24 billion of those projects have a medium-to-high probability of kicking off according to their current schedules.
Spending on transmission & distribution (T&D) projects is expected to be heaviest over the 2020-2021 period in New York, Texas, California, Ontario and Wyoming, Burt said, adding that projects totaling about $15 billion are scheduled to begin construction in those five states over the next two years.
Spending on industrial energy projects also is expected to be robust over the next two years: nearly 900 projects valued at more than $23 billion are expected to begin construction by yearend 2021. The Industrial Manufacturing sector is expected to lead the way with 268 industrial energy projects totaling over $11 billion in value. Most of that work will involve expansion of existing plants. After Industrial Manufacturing, the Metals & Minerals Industry is expected to break ground on about $4 billion of industrial energy projects by the end of 2021.
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.
