Merchant Power: Promise or Reality?

Fortnightly Magazine - January 1 1999
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Projects sprout in the United States and overseas, pushing the limits of grid capacity, turbine manufacturers and available sites.

Merchant power plants are emerging en masse to address the growing electricity needs of the United States and other countries, thanks to deregulation and fearless developers. While some plants are built to replace older, less-efficient utility-owned units, others would serve demand growth. Still more are planned as niche-oriented peakers - ready to supply the grid when marginal prices rise high enough. Ancillary services might offer another niche.

The bottom line is that the U.S. market is hot, as are others.

"With deregulation and the [number of] older facilities that will need to be replaced, the domestic U.S. market is much more fluid than it looked like it would be a few years ago," says Jeff Leichtman, a spokesman for Bechtel Enterprises in San Francisco.

Regardless of the purpose of these plants - most are still on the drawing board - they represent a stunning total of combined megawatt capacity. As of late October, developers had announced plans to build 109 plants in the United States to generate 56,368 MW, according to the Electric Power Supply Association of Washington, D.C. And EPSA's list isn't comprehensive.

How many of these projects will clear licensing hurdles and actually break ground? Will fuels and turbines be available to power these plants? Are there sufficient links to the transmission grids for these enterprises? And will banks finance the multi-billion-dollar cost of the proposals?

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