Two major engine manufacturers have formed a “virtual company”to cash in on the emerging retail market for electricity in NorthAmerica.

The new entity, Annapolis, MD-based Combined Energy System(CES), will operate as an independent company, although it will beowned by Cummins Power Generation Americas and Wartsila NSD NorthAmerica Inc. – both affiliates of major engine manufacturers. Itwill market two gas-fired and two light fuel oil-fired engines usedin the generation of power for the retail market, will provide”modular and pre-fabricated” power plants and other energyservices.

Specifically, CES will focus on selling engines for smallgeneration facilities, ranging in size from “less than 1 MW to upto 60 MW,” which are generally used to provide peaking andintermediate service, said Mack Shelor, director of marketing forCES and Wartsila. He estimated that existing demand for peaking andintermediate power was about 7,000 MWs a year. “We’d like to get ashare of that” market, which he expects to “eventually” hit $1billion annually.

CES’ target customers will be municipals, cooperatives, ruralelectric associations and, as restructuring becomes morewidespread, the “other people who are going to be in the retailelectric business,” such as independent power producers and theretail arms of investor-owned utilities, Shelor noted.

The backlog of orders for engines and other equipment that’sfacing larger generators isn’t evident in the retail market. “Themarket for our equipment is just beginning to emerge. The emphasishas been the big turbines, the big merchant market. As that beginsto get saturated or as the equipment begins to let’s say disappearoff the marketplace, which is what’s happened, then the retail sideof things begins to kind of come out into the open, which is wherewe’re at,” Shelor said.

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