Despite the current investment climate in the merchant power plant market, Energy Security Analysis Inc. (ESAI) projects that the Northeast should still see a significant amount of new generating capacity come on-line over the next two years. It’s the post-2003 period, however, where recent tightening in project financing will have the greatest supply impact, ESAI said in a recent memo to clients.

Compared to ESAI’s previous projections for New England and New York, recent probability assessments for capacity additions have actually increased to 8300 MW in the New England Power Pool (NEPOOL) and 6200 MW in the New York Control Area (NYCA) – up from February projections due to development advancement — although most of the megawatts are slated for the 2002-2003 period.

ESAI identified the following market indicators currently impacting future project development:

“The ESAI project assessment program has incorporated these and other factors into an assessment of capacity additions for the Northeast Power Pools based on probable outcomes,” said Paul Flemming, senior analyst at ESAI.

ESAI believes NEPOOL projects are heavily weighted toward the front end with little development seen in the back half of the five year forecast period, while NYCA projects are more evenly spread out.

According to ESAI, PJM has a large queue of projects that are in the earliest stages of development and are never likely to progress to serious contenders for actual construction. While there are always many projects that do not progress to maturity, the current climate severely hampers development opportunity,” said Flemming.

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