EPC Firms Wrestle with Changing Power Market

---

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The Trump administration's repeal of the Clean Power Plan has not led to increased interest in new-build coal-fired power projects, attendees at the 4th Annual Western Power Summit told Industrial Info.

"We've seen no surge of interest in coal-fired power," a representative for a large engineering, procurement and construction (EPC) firm said at the event, held October 23-24 in Denver, Colorado. "For our power industry clients, it's all about regulatory certainty--and that means gas-fired generation, because gas is cheap and those plants are fast and easy to build."

A representative of another EPC firm said he was getting a little worried about his firm's shrinking backlog of power work. "We're putting a lot of effort into chasing large petrochemical projects," the official said. "I don't see any new-build coal on the horizon. I think the president's efforts will streamline energy regulations, which is good, but that doesn't mean central station coal-fired generation is coming back."

"In the current market, we're struggling a bit," said a representative of a third EPC firm that specialized in fossil-fuel generation. "We don't do renewable energy projects, so we've not been able to capitalize on that growth sector of the industry. However, we do perform nuclear decommissioning work, and those are really long-term projects. That's something of a growth market for us." For more on the early retirements of nuclear power plants, see January 10, 2017, article - Entergy Strikes Deal to Close Indian Point Nuclear Plant.

This official continued, "We're trying to get better at building smaller, more decentralized projects, just like our clients."

A large equipment-rental firm told Industrial Info that solar power generation was one of the firm's hottest segments. The firm is not active in the wind segment, but it is seeing strong demand for equipment rentals from petroleum refiners and petrochemical companies, whose facilities are scheduling turnarounds. "There's also been a mini boom in sports stadium construction, and we have participated in that," the representative added.

Industrial Info spent two days with EPC company representatives, utilities, consultants, and suppliers of goods and services at a conference organized by Access Intelligence (New York, New York), publishers of POWER magazine. A topic of conversation throughout the event was what one of the moderators called, "the democratization of energy," meaning the rise of renewable energy, distributed generation like rooftop solar and electricity storage.

One speaker discussed the non-energy benefits (NEBs) of energy efficiency, a term which some in the audience say they had not heard before. Another speaker detailed how utilities could use data analytics to help build an electric vehicle charging network. Another speaker on the session entitled "Big Data: Big Headache or Big Opportunity?" detailed how data analytics helped a super-critical coal-fired power plant in Southern Europe lower annual operating costs by between $340,000 and $605,000.

"Digitalization is the key to managing power-plant operations in a dynamic environment," the speaker, an executive with a major equipment supplier, told about 120 attendees at the conference.

The Western Power Summit also included sessions on coal mining, market structure and the water-power nexus in the arid West. Some speakers and attendees groused that coal has been hurt by subsidies for renewable power, but one speaker clashed with that perspective, saying, "Gas has been coal's kryptonite." For more information, see October 30, 2017, article - Conference: CCS, Exports Key for Revival of Western Coal.

Regarding market structure, panelists remarked that the West is the only major region in the country not operating as an organized energy market like the PJM Interconnection, MISO or Southwest Power Pool. One effort to create a multi-state energy market in the West, Mountain West Transmission Group, appears to be reaching critical mass while another, an expansion of the California Independent System Operator (CAISO), continues to evolve. But governance issues have held up that evolution: energy officials in some Western states are wary of relinquishing their authority over in-state energy decisions to officials from another state.

Two speakers--a utility transmission planner and a transmission analyst at an environmental organization--agreed that an integrated Western power market could save billions of dollars in planned capital outlays for power plants and transmission lines. The speakers estimated savings at greater than $1 billion, but less than $9 billion.

"Because we don't have an organized regional market, we use our resources very wastefully," said the representative of an environmental organization. "We can do this much more efficiently. An integrated Western market could eliminate a lot of planned capital expenditures. We'll still need new transmission lines and power plants, just less of them."

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 https://www.industrialinfo.com/.