Respondents see future for coal power generation even as plans for
wind, solar increase
Overland Park, Kan. (18 February 2010) – Black & Veatch today released
the results of its fourth annual survey of U.S. electric power industry
leaders, which showed reliability of the electric grid, regulatory issues and
long-term investment as overall top concerns.
The “Strategic Directions in the Electric Utility Industry Survey” for
2009/2010 polled 329 industry participants, including professionals from public
sector (municipal, state and federally owned) and investor-owned utilities. For
more details on the electric utility survey and downloadable visuals, visit www.bv.com/energysurvey.
“The times are tough, so the industry is returning to its Job One:
maintaining reliable service and preserving financial health. Reliability and
regulation popped back to the top of the major issues of concern for industry
managers,” said William Kemp, who leads Black & Veatch’s management
consulting services around strategy and sustainability.
Highlights of the survey include:
- Many utilities’ industrial and commercial sales have been severely or
seriously eroded by the recession, and less than one quarter of respondents
think electricity usage in their area will grow by more than 1.5 percent
annually in the next ten years. Growth expectations have ratcheted down.
- Nuclear energy was selected as the generation technology that is best
suited to help the country meet environmental standards, followed by wind and
natural gas. The rapid rise of natural gas in the rankings – it was deep in the
pack in last year’s survey – indicates growing confidence in gas as an
economically and environmentally attractive bridge to a lower carbon
future.
- Wind power projects are underway or planned within the next 3-to-5 years by
nearly 79 percent of survey takers. Solar technology also achieved significant
penetration, with 73 percent of respondents reporting projects underway or
planned within the 3-to-5 year horizon.
- Electric utility spending on programs for energy efficiency and demand-side
management is surging, to almost 2 percent of revenue. The survey responses
indicate that the industry is spending an amount equivalent to about 15-20
percent of its pre-tax earnings – to get customers to use less of its
product.
- Capital spending on new electric infrastructure has declined for two years
in a row – for the first time since the 1930s. Generating plants are the asset
group in biggest need of replacement. Information technology systems followed
close behind, reflecting the priorities placed on the Smart Grid and the need
for improved security against cyber attacks that have crippled power grids in
other countries.
- Carbon emissions maintained its place as the dominant environmental concern
for electricity industry leaders, with water supply second. However, in a
separate question asking survey respondents if they believed there was a future
for coal generation, more than 75 percent selected the response: “Yes, when
fiscal realities are fully considered.”
- While a majority of respondents expect some form of carbon legislation to
be in place by 2012, more than 70 percent do not favor the cap and trade system
embedded in current legislative proposals. Some 52 percent of the respondents
believed that the United States cannot afford carbon legislation.
- Fewer utility managers are worried about the aging workforce issue in the
immediate future, reflecting the deferral of retirement for many older workers
as the declining stock market impacted their financial portfolios. However,
some respondents voiced a concern about a retirement balloon in the next 2-3
years, as soon as the markets recover enough to make retirement affordable
again.
“Utilities are facing increasing demands to spend more money on basic
infrastructure, energy efficiency, the Smart Grid, and cyber security. Their
expected leading role in curbing carbon emissions would hit utility costs very
hard. Yet their sales are declining or relatively flat, and regulatory
commissions are reluctant to approve rate increases when the economy is down.
Electric utilities will be hard pressed to satisfy both customers and investors
over the next few years,” said Kemp.
About Black & Veatch
Black & Veatch is a leading global engineering, consulting and construction
company specializing in infrastructure development in energy, water,
telecommunications, management consulting, federal and environmental markets.
Founded in 1915, Black & Veatch develops tailored infrastructure solutions
that meet clients’ needs and provide sustainable benefits. Solutions are
provided from the broad line of service expertise available within Black &
Veatch, including conceptual and preliminary engineering services, engineering
design, procurement, construction, financial management, asset management,
program management, construction management, environmental, security design and
consulting, management consulting and infrastructure planning. With $3.2
billion in revenue, the employee-owned company has more than 100 offices
worldwide and has completed projects in more than 100 countries on six
continents.
Black & Veatch Media Contact: Linda Lea, +1 913 458
4629
Black & Veatch 24-hour Media Hotline: +1 866 496 9149
For additional information, visit our Web site:
www.bv.com