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POWER-GEN Americas exposes soft domestic market, overseas opportunities

Issue 2 and Volume 100.

NEWS UPDATE

POWER-GEN Americas exposessoft domestic market, overseas opportunities

POWER-GEN Americas, held toward the close of 1995, saw the end of another stagnant year in the U.S. market and the beginnings of rumors that the industry is pushing its luck. Several speakers at the conference voiced concerns regarding the domestic freeze, which is now creating dwindling capacity reserves and increasing likelihood of recurrent reliability problems.

U.S. firms heavily entrenched in the international market are balancing their budgets by taking advantage of the opportunities overseas. Those playing only the waiting game at home are showing signs of wear and tear. The conference felt the slowdown somewhat this year, with attendance falling from nearly 14,000 to around 13,000. Organizers attribute the light attendance to both siting and industry slowdown. The 1995 POWER-GEN Americas was held for the first time in Anaheim, Calif., with more than 850 exhibitors from the worldwide power generation industry on hand, displaying their wares or services. POWER-GEN Americas will return to Orlando, Fla., Dec. 4-6, 1996.

In his welcome address at POWER-GEN, Edward K. Aghjayan, City of Anaheim general manager of public utilities, confirmed that electricity has been prompted by competition from the beginning. Anaheim celebrated the centennial of its electricity system in 1995. Aghjayan noted the first 500-light capacity system was installed with a cost of $7,000 in 1895. By the time the original system was complete, demand already exceeded capacity.

Thomas Page, San Diego Gas & Electric chairman and CEO, said the obstacles are not insurmountable. “There is a need to change, to shift from asset-based business to outcome-based business. We need to give more importance to ideas and intellectual capital.” He also said rates need to be altered to a performance basis.

William Brian, Edison Electric Institute vice president, said, “It`s not necessary to speculate about the future impact of competition on the electric industry. Just look around. Competition is here. The future is now.” Thousands of utility and non-utility generators produce and sell electricity in the United States, and since the introduction of the Energy Policy Act, hundreds of new wholesale generators and power brokers have appeared. “Through the first six months of 1995, marketers sold almost 7 million MWh of electricity, and this from an industry that didn`t even exist 10 years ago,” he said.

“In fact, over the past five years, almost 50 percent of the new generation has been constructed by non-utility generators.” One response to change that is easily seen is the falling price of electricity, which has dropped 25 percent nationally since 1982.

Timothy D. Statton, Bechtel Power Corp.`s incoming president, captured the crowd`s attention by declaring what he sees as the “7 deadly sins” of the international power arena. They are:

1. Pride. It is imperative to remember that all projects, to be successful, must be viewed as local, regardless of where they are sited. “We can try to force our offerings–whatever they may be–on the market, or we can tailor them to the market.”

2. Envy. Companies must not envy their competitors` return on expenditures. “Everywhere you look these days, the euphoria of limitless opportunities based simply on demand statistics has been replaced by the hard reality that all of us are in for a long and incredibly competitive fight.”

3. Greed. The global economy is recovering from the 1991 recession, and emerging countries are looking for local partnering and reasonable price tags. “Succeeding in the new international marketplace means being realistic about your expectations–and being prepared to share the rewards of your success.”

4. Sloth. The key to success is more than a competitive price or project experience. It is also more than a good reputation. “The winners will be, or have partners who are: highly integrated, globally networked, broad-based with respect to skills and offerings, and financially sound.”

5. Gluttony. “Most of us have a long way to go before this becomes an issue. We don`t need to worry about getting fat at the international buffet.”

6. Lust. “Don`t fall in love with your project, or your contract, or anything else … Know beforehand when to walk so you don`t make the decision based on emotion.”

7. Anger. Every country is in a different stage of transition with its own particular requirements and ground rules. “Try not to take it personally when it takes five years to close a job. And when your developer says the project will close next quarter–that`s fine, but don`t book it.”

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Click here to enlarge image

Visitors from around the globe gravitated to the many working models and display items on the exhibit floor at POWER-GEN Americas `95, which showcased more than 850 manufacturers, suppliers, vendors and service organizations.