Int’l power market strained with new capacity investments
Sunday, October 15, 2006
By MYRNA M. VELASCO
WASHINGTON D.C. — The global electricity market is hurriedly getting strained on taking shots to corner fresh round of capital for greenfield power projects to plug near-term capacity gap in most countries.
This was the view aired by United States Federal Energy Regulatory Commission (FERC) chairman Joseph T. Kelliher, as he noted that the investing community is still in jitters due to the lack of reliable and sustainable regulatory environment that they count on to fetch viable returns on their investments.
The world will be competing on cornering capitals for the next wave of power investments; but only the countries which can offer viable regulatory and investment environments (measured depending on risk-reward ratios) that are likely to win the race.
In the case of the US, he stressed that the need to act on immediate investment for additional capacity was best demonstrated during the summer months this year when electricity supply had gone scant due to dramatic surge in demand when consumers had to fight off the very high temperatures; and when calamities struck (such as hurricane Katrina) which damaged some power infrastructure that triggered blackouts.
The challenge for regulators at this point, he said, would be to keep pace with putting in rules that could thrive "in the very dynamic market" of the electricity sector.
He emphasized that the dilemma faced by countries in scouring for new round of investments in the power industry almost tread on the same line including the need for reliable and predictable regulatory framework.
Aside from capital inflows for new power capacity, calls have also been set forth to simultaneously undertake strengthening of transmission networks or systems; and to develop effective demand response, primarily for the endusers.
On investment influx, Kelliher noted that key reform being sought is on the pricing front wherein electricity rates ought to be reflective of actual market dynamics and not unduly manipulated or frozen to satisfy some agendas.
Several jurisdictions, including the US, have also raised concerns on siting of projects with policies and laws not aptly providing them easy access to proposed project areas.
Other concerns also deal with project design, including the sustainability of fuel supply to run the power facilities and the technology employed to keep up with emission standards.
The United States itself, he opined, is not placed on a comfortable level with natural gas markets (to which it is part/ly dependent of) now gradually disappearing
posted by philpower @ 5:55 AM,
