U.S. generation capacity additions in 2005 totaled 17 GW, down 25% from 2004 and 75% from 2002, and FERC staff predicts additions of new capacity will fall again this year. In a presentation to the full Commission Thursday, Stephen Harvey, deputy director of FERC's Office of Market Oversight and Investigations, said current plans indicate that additions in 2006 are likely to be roughly half the 2005 level.
Harvey also predicted that there will be an "increasing proportion of development efforts focused on baseload coal and nuclear as well as in renewables."
Harvey said several trends were interesting in 2005. One was that generation additions were more diversified, with 84% gas-fired as opposed to 96% in 2004. Coal remained steady at 2% and wind increased significantly from 1% in 2004 to 14% in 2005 mainly because of the extension of federal tax credits and the expansion of state fuel diversity initiatives.
"Clearly gas is and likely will continue to be a dominant fuel for new generation for some time," Harvey said. "Although there has been increased discussion of coal and nuclear generation than in the recent past, the lead times for these investments are long and generation using these fuels did not make big showings in 2005."
Harvey said the biggest area for investment was the Southeast, mainly Florida which is facing transmission congestion. California and the Midwest also saw high levels of investment, with generation capacity in California tripling and capacity in the Midwest nearly doubling, he said. New England had no additions and PJM's were small.
"Overall, about one-third of all additions appear to have been made in areas that are constrained and face transmission congestion, particularly California, Wisconsin and downstate New York," he said.
Regarding investors, Harvey said the staff of the Federal Energy Regulatory Commission found that municipal utilities and cooperatives added a little less than 4 GW of power generation in 2005, which was slightly less than in 2004. Investor-owned utilities added about 7 GW of generation capacity, which was almost triple their 2004 investment. And utility affiliates added a little more than 2 GW, which was a little more than one-third more than what they added in 2004. Independent power producers added more than 4 GW in 2005 compared to 7 GW in 2004. Harvey said it is too difficult to predict trends in the types of companies that will be investing in generation going forward.
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