Overseas Electric Power Project Activity to Surge in 2014

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Overseas economies may not be growing as robustly as they once were, but there continues to be a huge demand for investments in Electric Power outside the borders of North America, according to Britt Burt, Industrial Info's vice president of global Power Industry research.

Speaking at a recent Industrial Info Outlook briefing in Jersey City, New Jersey, Burt told about 250 attendees there were about $4.9 trillion in power projects under development outside North America. Nearly all of those overseas projects represent new-build electric generation plants. This includes project activity being developed by both traditional electricity producers and industrial energy producers, where processing plants such as refineries, chemical plants, sugar factories and others generate power on site.

Click on the images at right for charts showing Power Industry projects under development overseas and within North America.

"Many of these projects are in an early planning stage," Burt said. "Not all of them will actually come to fruition. Some of them compete against each other, and when one project is selected, the others are cancelled. Many of these proposed projects will be delayed because of environmental mandates or funding issues. In India, for example, we are finding a number of power projects have been delayed because of problems securing coal linkages for the plants. There are many things that can prevent a project from keeping to its original development schedule. But the overseas power market is highly dynamic: When one project gets deferred or cancelled, in our experience another project will take its place."

Burt said that Industrial Info is tracking about $410 billion of power projects that are scheduled to kick off next year in China, and an additional $366 billion are slated to begin turning dirt in South Asia in 2014. Following those regions, Europe is the next-largest non-U.S. power market, with an estimated $264 billion of projects scheduled to begin next year. Latin America has scheduled the start of about $117 billion of power projects next year, while Southeast Asia plans to begin work on approximately $87 billion in 2014.

By contrast, the North American Power Industry plans to begin work on slightly more than $200 billion of projects next year, Burt said.

"Viewed globally, including North America, Industrial Info is tracking 3,259 gigawatts (GW) of new-build electric generation projects under development valued at about $5.3 trillion," Burt told the Outlook attendees. "Over the next 10 years, the world will need about 2,400 GW of new generation capacity needed to keep up with electric demand, legislated demand and scheduled plant retirements. Of the new-build generation projects we are tracking, about 38%, or 1,240 GW, will burn coal, while hydroelectric projects account for about 20% of planned new build capacity, roughly 637 GW."

Generation fired by natural gas or oil will account for about 17% of planned new-build project, followed by wind (458 GW) and nuclear (257 GW), he added.

"Despite all the talk about the demise of new-build coal-fired generation, we expect that coal will account for about one-quarter of all new generation capacity that will be built around the world," Burt said, adding that much of this planned coal-fired capacity is scheduled to be built in China and India.

In addition to a large pool of new-build generation projects, Burt said there was a large and growing demand for in-plant capital expenditures, such as plant upgrades, instrumentation and control upgrades, equipment additions and plant modernizations.

Industrial Info also has increased its tracking of environmental compliance projects overseas, including projects in China, Australia and Oceania. In addition, Industrial Info is tracking more than 2,000 overseas Power Industry maintenance projects with a combined value of $15 billion.

"It's hard enough to develop and construct a new power plant, but operating overseas carries an additional set of risks involving currency fluctuations, political stability and things of that nature," Burt reminded the audience.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine 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.