"Blue book" of power generation finds that value of U.S. electric generation has fallen


SACRAMENTO, Calif., Oct 14, 2003 -- Henwood Energy announced the release of the Power Generation BlueBook Advisory Service that offers the first comprehensive independent view of the valuation of U.S. electricity generating plants.

"There is a great deal of financial restructuring going on in the electric power business today. The Power Generation BlueBook focuses on whether it will be sufficient to return the asset fleet to profitability and when," said Mark Henwood, president and CEO of Henwood Energy. "We provide a cost-effective independent benchmark on changing asset values and the probability that a plant will be able to service its debt and make a return over the next fifteen years. This is especially important given the large merchant exposure in today's market and the increasing movement toward asset-backed trading," he added.

Power Generation BlueBook Advisory Service findings include:

-- Nationally, more than $25 billion of value has been lost on new combined cycle generation built since 1999 from an initial $90 billion investment.

-- The West is the relative winner for combined cycle plant valuations due to a faster than expected recovery from the current overbuilt position and a wholesale electricity market supported by high gas prices. California and the Pacific Northwest, Florida, and Texas are regions with the best relative asset valuations.

-- The regions suffering the lowest asset valuations have the largest overbuild which will require time to absorb, and include the Southeastern US including the Entergy, Southern and SPP markets, Illinois (MAIN), and New England.

-- In a significant part of the US the 15-year expected values for combined cycle units are below 70 percent of new build costs, suggesting that on current values many could have difficulty making full debt repayments before 2018.

"The Power Generation BlueBook enables Henwood to provide owners, lenders, and credit managers a clearer picture of plant and portfolio asset values and their current leverage against debt because we incorporate commodity price volatility and volume risks that provide a clearer understanding of the true asset value," Henwood said.

The Power Generation BlueBook covers 4,350 electric power units, 828 GW of plant production with an estimated $462 billion in value. The Advisory Service is both a report on the current worth of generation assets and a regularly updated database providing the detail behind the changing asset valuation that will be updated each year in the Fall and the Spring. The Power Generation BlueBook is the latest in a new class of products from Henwood leveraging its RISKSYM simulation software, Power Market Advisory Service Market Outlook and Price Forecast, and Henwood's market leading EnerPrise databases to create value-added insight into the changing electric power industry future.

Henwood Energy's methodology is consistent with the Committee of Chief Risk Officers' recommendations on asset valuation in illiquid markets and is widely used throughout the industry as a standard for asset valuation. The Power Generation BlueBook takes a fundamental view of the intrinsic value of electric power asset valuation, incorporating the physical characteristics and market volatility as it affects the operation of power plants. These are combined using cash-flow-at-risk (CFaR) to produce plant-by-plant detail, probabilistic output and a range of valuation and risk parameters for each plant evaluated.

For a white paper summarizing Power Generation BlueBook key findings and product information go to www.henwoodenergy.com/bluebook or call 916-609-7754.

About Henwood Energy

Henwood Energy is a provider of enterprise software, data and strategic consulting services to energy companies and energy investors. Since 1985, Henwood Energy has helped customers assess power market fundamentals, develop integrated resource plans and manage their complex electric power business risk. Henwood is a wholly owned subsidiary of Global Energy Decisions, LLC, an integrated data, software and analytics company that brings together innovative businesses and people to provide a new standard in energy information.

Sponsored by FLSmidth

Related Articles

Flood issues at Arkansas Nuclear One given “yellow” rating by NRC

The U.S. Nuclear Regulatory Commission (NRC) rated as yellow, or of substantial safety significance, two flood protection violations at a nuclear power plant owned by Entergy (NYSE: ETR).

Houston price surge subsides; FitzPatrick nuclear plant returning to service

After seeing its spot power price spike to $93/MWh the previous day, Houston saw its spot price decline 50% to $46.50/MWh in the prices posted Oct. 8 by the Energy Information Administration (EIA).

Follow Power Engineering on Twitter

Products Showcase

Dynamic Fluoride Ion cleaning DFIC of industrial natural gas turbines Hi-Tech Furnace Systems

Dynamic Fluoride Ion Cleaning of IGT Parts

The Dynamic Fluoride Ion Cleaning (DFIC) Process from Hi-Tech Furnace Systems is able to clean deep, narrow cracks of oxides by cycling between negative, atmospheric, and positive pressure.

Latest News

Shutterstock coal production trucks

Weekly Coal Production

The Weekly Coal Production shows how much coal is being produced across the U.S.

Federal Reserve Bank of Dallas Weekly Economic Indicators financial business

The Federal Reserve Bank of Dallas' Economic Indicators

The Federal Reserve Bank of Dallas offers a glimpse into how the markets are doing domestical...

Kvaerner awarded contract for gas-fired power plant in Delaware

Kvaerner North American Construction Inc. and its joint venture partner, Parsons Brinckerhoff...

Canadian Solar purchases two solar projects

Canadian Solar Inc. has acquired a majority interest in two utility-scale solar power project...

Operators Restart Unit 2 at PPL Susquehanna

Unit 2 at the PPL Susquehanna nuclear power plant near Berwick, Pa. resumed generating electr...

Settlement agreement limits cost recovery at Edwardsport

The Indiana Utility Regulatory Commission (IURC) on Dec. 27 modified and approved a settlemen...

Toshiba in talks to sell portion of Westinghouse nuclear unit

Toshiba Corp is in talks  to sell up to 16% of its stake in the Westinghouse Electric Co...

Utah nixes nuclear waste storage facility

Plans to park radioactive waste at a storage facility in Utah have been officially called off.

Archived Articles

2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013

Power Engineering Current Issue

10/01/2014
Volume 118, Issue 10
1410pe-cover

Power Industry Wire News

Vantage Drilling Company Reports Third Quarter 2014 Results

Vantage Drilling Company Reports Third Quarter 2014 Results

Top Industrial Market News Stories for the Last Week of October 2014, an Industrial Info News Alert

Top Industrial Market News Stories for the Last Week of October 2014, an Industrial Inf...

Synergy Resources Announces $125 Million Purchase Agreement for Wattenberg Field Assets and $230 Million in Committed Financing, Company to Host Conference Call Tomorrow, October 31st

Synergy Resources Announces $125 Million Purchase Agreement for Wattenberg Field Assets...

AXT, Inc. Announces $5 Million Stock Repurchase Program

AXT, Inc. Announces $5 Million Stock Repurchase Program

SAExploration Announces Third Quarter 2014 Earnings Release and Conference Call Schedule

SAExploration Announces Third Quarter 2014 Earnings Release and Conference Call Schedule

Power Engineering

Article Archives for Power Engineering Magazine

Continuing Education

Professional Development Hours

To access a course listing associated to a specific topic listed below, click on the topic of choice from the list below.

Latest Energy Jobs

View more Job Listings >>


Power Engineering Newscasts

EPA chief: carbon caps will boost economy
Australia, Russia enter nuclear power agreement with Argentina
Largest battery energy storage in North America now operational
EPA chief: carbon caps will boost economy Largest battery energy storage in North America now operational Australia, Russia enter nuclear power agreement with Argentina Texas’ Panda Temple combined cycle plant up and running
Siemens agrees to acquire Dresser-Rand
Safety concrete poured at UAE nuclear reactor power project
Foster Wheeler to upgrade natural gas-fired power plant’s emission controls
GE, TransCanada partner on natural gas turbine design
Energy storage global market to grow to $15.6B by 2024; DOE awards $2M to support taller wind turbine towers; Hinkley Point C nuclear project have financial incentives approved; N.J. company building waste-to-energy project in Ireland