|
Parsons Rides Merchant-Power Boom Deregulation has opened the door for a new breed of developer. By Karen Adelman for Office.com Dec 7, 2000— In 1999, worldwide construction and engineering giant Parsons Corp. pulled back
The current expansion of Pasadena, Calif.-based Parsons Energy & Chemicals is due, in large part, to an industrywide trend toward power plants that are being built by entrepreneurial, "merchant" power companies rather than traditional utilities. According to Robert H. Patrick, an industry observer and associate professor at Rutgers University School of Business, the merchant-power niche is a "real growth market (of which) we're just barely touching the beginning." Massachusetts Institute of Technology economics professor Paul Joskow agrees that the vast majority of new power plants are merchant plants, which are experiencing "huge growth."
According to Don Lassus, Parsons' manager of pre-contracts, deregulation made it possible for anyone to build a power plant, get on the grid and start selling. And the surge in demand created by the increased use of computers and peripherals, he says, provides a strong financial incentive to enter the market. Power customers will pay what it takes for the electricity they need, according to Lassus — but, he says, "they'll scream and squeal about paying more." Patrick is somewhat more circumspect about the ease of entry into the power market, observing that merchants need to know where they fit into the grid. He allows that high prices signify a "green light" for merchants to enter the market. "In California, there are people drooling over the prices," Patrick claims. Despite the financial and scheduling pressures, however, environmental concerns are at the forefront of merchant-power projects, Lassus says. "Before, only the guys in the Sierra Club cared (about environmental issues); now, everyone does," he says. "There are stringent environmental standards, and it's in the interest of merchant (developers) to build environmentally friendly plants. Otherwise, they won't be welcome in their communities."
Patrick explains that it is in the merchant-power developers' interest to build smaller — even mobile — plants that can be constructed and operational within a short time frame. "It's the distributed-power notion, with smaller plants more widely distributed over the grid. This effectively rules out nuclear and coal plants (for merchant developers)," he explains. The state-of-the-art, 650-megawatt power plant Parsons is building for Constellation Power is being built on a rural, greenfield site. It is designed to be one of the cleanest in the nation, using two natural gas turbines and one steam turbine. The construction, which began in August, is expected to be ready to produce electricity for the wholesale power market as soon as June 2002. |
||||||||||||||||
|
||||||||||||||||