An analysis of current valuation trends explains why some assets command better values than most.
Average North America power-plant asset value is at $725/kW.1 Compared with our winter 2005-2006 analysis, this figure has barely changed; however, we have seen significant value movements based on region, fuel, and asset types. Important findings include:
• Nuclear plant values have increased by almost 25 percent. Average nuclear value is now around $1,730/kW. This increase is primarily driven by higher energy costs across all fossil fuels.
• Average coal-fired generation values have dropped more than 10 percent. Coal plants continue to enjoy healthy spark spreads because of higher gas prices in the short term; however, compared with our last valuation, average coal-fired generation values have dropped more than 10 percent. That is driven primarily by the significant amount of new coal generation activity, particularly in the Midwest and eastern WECC regions. Global Energy now expects more new coal-fired generation will be built in the long term. That suppresses the values of the existing coal plants in these regions.
• Generators in load pockets such as New York and eastern PJM still are enjoying healthy cash flows. In New York City, a typical new gas-fired combined-cycle plant can be valued from $1,100/kW to $1,500/kW depending on the leverage of the investment.2