North American Power Industry Set for Robust Capital Spending During First Quarter of 2008

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Researched by Industrial Info Resources (Sugar Land, Texas)--The North American Power Industry is on track for what appears to be yet another healthy year in terms of capital spending. There are 256 capital projects representing $33 billion in North America that are scheduled to kick off in the first quarter of 2008. Capital spending for projects during this timeframe includes grassroot construction, unit additions at existing power stations and environmental-compliance projects.

Click on the image to view a chart showing the breakdown of 1Q08 Construction Starts.

From the standpoint of new generation, 201 new units representing more than 18,000 megawatts (MW) with a first-quarter 2008 construction kick-off date have been identified. Of those, 52 units and 5,400 MW are being added to existing power stations. The remaining 149 units and 12,800-megawatts are under development as grassroot or new power plants. Overall, more than 6,500 MW of coal-fired capacity, 5700 MW of natural-gas fired capacity and 3,700 MW of wind generation are scheduled to kick off in the first quarter. Additional units using petroleum coke and renewable energy sources, such as biomass, landfill gas, geothermal, hydroelectric and solar, are also set for construction kickoff in the same period.

In addition to new generation, one of the leading drivers of capital spending for the North American Power Industry is environmental compliance. During the first quarter, nine flue-gas-desulfurization scrubbers representing a capital investment of more than $1 billion are scheduled to start construction. Also scheduled to kick off during the first quarter are 14 nitrogen oxide (NOx) projects representing $242 million. These projects include installations of low NOx burners, over-fire air systems, selective noncatalytic reduction units and selective catalytic reduction units. Other environmental compliance projects scheduled for kick off during the first three months of 2008 include baghouses and activated carbon injection systems.

As power producers continue to develop strategies to remain competitive in the market, other projects are necessary. These projects include modernizations, control system upgrades, boiler rebuilds and turbine uprates. It is expected that several of these projects will move forward in the first quarter of 2008.

Although the total capital expenditure for projects kicking off during the first quarter exceeds $33 billion, it is possible that several projects will face project delays, cancellation or other on-hold activity. Of the 256 projects, 75 of them representing more than $11 billion have been updated over the past 90 days and were verified to move forward during the first quarter of 2008. As project updating and verification continues, it is expected that new projects will be identified and added to the database while others will be found to have been canceled or delayed.

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