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Major Engine Makers Eye Retail Power Market

Major Engine Makers Eye Retail Power Market

Two major engine manufacturers have formed a "virtual company" to cash in on the emerging retail market for electricity in North America.

The new entity, Annapolis, MD-based Combined Energy System (CES), will operate as an independent company, although it will be owned by Cummins Power Generation Americas and Wartsila NSD North America Inc. - both affiliates of major engine manufacturers. It will market two gas-fired and two light fuel oil-fired engines used in the generation of power for the retail market, will provide "modular and pre-fabricated" power plants and other energy services.

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

CES' target customers will be municipals, cooperatives, rural electric associations and, as restructuring becomes more widespread, the "other people who are going to be in the retail electric business," such as independent power producers and the retail arms of investor-owned utilities, Shelor noted.

The backlog of orders for engines and other equipment that's facing larger generators isn't evident in the retail market. "The market for our equipment is just beginning to emerge. The emphasis has been the big turbines, the big merchant market. As that begins to get saturated or as the equipment begins to let's say disappear off the marketplace, which is what's happened, then the retail side of things begins to kind of come out into the open, which is where we're at," Shelor said.

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