Firms in the global power market have seen phenomenal change in the sector over the past four years, says Tim Gelbar, president of power and process in the Americas for London-based AMEC. While companies worldwide are still moving forward with plans to build coal, nuclear and gas powerplants, there has been a major slowdown in power work as the recession pushed global power consumption down 1.6% in 2009, the first time power consumption declined since 1981, according to the International Energy Agency (IEA). One exception is renewable power, which has been stimulated by a desire to reduce carbon-dioxide emissions, industry sources say.
“Projects led by Tier-2 or -3 developers with limited access to financing have been canceled, and baseload power development has largely dried up in Organisation for Economic Co-operation and Development [developed countries]. Even in the developing economies, fossil plants have been delayed. Bucking the trend have been nuclear programs, transmission and distribution and renewable projects,” says Mark Trueman, managing director, power, for Sydney, Australia-based WorleyParsons.
Power markets in the Middle East and Russia were the most affected by this year’s economic crisis, says Hans-Jurgen Tenbusch, marketing manager for Frankfurt, Germany-based Lahmeyer International. Thermal projects were the most impacted by the economic downturn, and renewable projects were affected in the first half of the year, though that market has improved in the second half, he says.
According to IEA, investments in renewable generation fell about 20% in 2009, a number that would have been closer to 30% if it were not for the economic-stimulus funds in the American Recovery and Reinvestment Act. Iberdrola Renewables, a subsidiary of Bilbao, Spain-based Iberdrola, S.A., says the more than $500 million of stimulus money it received in 2009 for several wind farms, including the 202-MW Penascal wind farm in Texas, will spark an additional $6 billion in spending in the U.S.
Power generation is not necessarily being built to meet demand but to meet legislative mandates for increasing renewable power, Gelbar says. “Renewables are a new driver” of power construction, he says. “Anything to reduce the carbon footprint is being pursued,” including energy efficiency and conversions to biomass, he adds. AMEC recently won a $93-million contract to convert a linerboard mill in Valdosta, Ga., to burn wood waste.
Opportunities associated with CO2 reductions could be tremendous for engineering and construction firms that work in the power sector. IEA says investments in infrastructure to lower carbon consumption could top $10.5 trillion by 2030. “The stars are aligned” for more investment in renewable power, says Luc Benoit, head of power for Los Angeles-based AECOM Technology Corp.
Despite the focus on renewable power, investments in traditional fossil fuels will continue to provide the bulk of the world’s electricity, IEA says. Coal is expected to grow three percentage points, to 44% of the world’s generation mix by 2030.
Dean Oskvig, president and CEO of Overland Park, Kan.-based Black & Veatch’s global energy business, says coal is still the strongest option in developing countries. In South Africa, “if you consider economics along with environment along with community, you have to think hard about coal, because that is what they have,” Oskvig says. Investment in coal generation is also strong in China, India and Vietnam, he adds.
Despite some hesitation because of costs, new nuclear power- plant projects continue to move forward. Baton Rouge, La.-based Shaw Group last spring poured the first concrete at the first of four, 1,154-MW AP1000 nuclear units in China’s Zhejiang province. Shaw also is doing preconstruction work on sites in Georgia and South Carolina for new nuclear units, and the firm has begun building modules for the units at a plant in Shreveport, La.
“We are constructing pieces for those plants,” that will begin construction in about 2012, says Jeff Merrifield, senior vice president of the power division of the Shaw Group. But he notes nuclear power in the U.S. would increase if loan guarantees were more available. “Having a greater degree of certainty would be most helpful,” he says.
Post a comment to this article
Report Abusive Comment