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Electricity News: Biweekly Roundup 1/18/2013

With an eye to providing you easy to understand information on the electricity industry (prices, market changes etc) we’ll be doing a biweekly roundup of news from around the web. We will gather information from EIA (Electricity Information Administration) and other news sources across the web and give you our objective assessment of the information.

Wind Tax Credit Extensions The US government extended the Wind Farm Production Tax credit. This tax credit extension is for one more year and was extended as part of the deal to avoid the fiscal cliff. Wind farms under construction by the end of the year will be eligible for the tax credit. The extension by a year is not enough to spur the accelerated development of wind farms that is required to meet the renewable energy commitments the government is making. The low price of natural gas continues to further dampen the desire by wind farm developers for new builds as the price of power from wind will need to come down a lot further for it to be economically competitive. More information can be found on the EIA website.

Mergers and Consolidation in Electricity Generation CapacityOver 107 Gigawatts of electricity capacity were bought and sold in the US electricity market in 2012. The consolidation going on in the electricity industry is one of two ways that electricity generators tend to increase. The other way is by building new capacity, this is quite expensive and takes a long period of time:  on the shorter side it takes about 10-12 years from permitting to build completion for a nuclear power plant. The irony here is that it takes less than a year from permitting to installation for a solar farm to be built; the only reason why there are not more renewable energy builds is because the cost is still not as competitive.

Generation capacity Mergers and Acquisitions byyear


Image from EIA (http://www.eia.gov/todayinenergy/images/2013.01.16/byyear.png)

The mergers and acquisitions that occurred are

1. Duke Energy and Peabody Energy

2. Exelon Corporation acquiring Constellation Energy Group

3. NRG Energy acquiring GenOn Energy.

Reasons for some of these acquisitions or mergers are fuel mix diversification, regulatory compliance requirements, buying of distressed assets in the marketplace and freeing up of operating capital.

More information can be found on the EIA website.

Biggest Wind Farm Contract Awarded to Siemens IncThe National Nuclear Security Administration awarded the largest Wind Farm contract to Siemens. The contract is to build five 2.3 Megawatt (MW) turbines on 1500 acres of government property in Amarillo Texas. The wind farm will generate approximately 45M kWh of power and promises energy savings of $2.9M annually. More information can be found on the NNSA.gov website.

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