After taking a dip in 2018, spending in the U.S. power industry for pipe, valves and fittings is forecast to continue to rise through 2020, as project activity in various sectors increases. In the power industry, PVF is used in everything from coal-fired boilers to nuclear cooling systems, and a steady amount of project activity is a boon to PVF suppliers.
Industrial Info Resources (IIR)is tracking more than 3,300 capital and maintenance projects in the U.S. power industry set to kick off in 2019 and 2020, and estimates that PVF spending in the power sector for these two years will be more than $143 billion. The projects cover a range of geographies; however, regional activity, such as a high concentration of retiring coal-fired plants, necessitates higher spending in various locales.
Among the recent trends in the U.S. power industry is the retirement of several aging coal-fired power plants for environmental and economic reasons. While this trend is expected to decline somewhat in the future, it will nevertheless remain strong.
Britt Burt, Industrial Info’s vice president of research for the power industry, notes that IIR tracked about 17,000 megawatts of coal-fired power plant closures in 2018, significantly more than in any single year since 2013. This number is expected to fall to about 9,000 megawatts this year, then rise to about 13,000 megawatts in 2020.
Although new-build coal-fired activity has ground to a halt in the United States, environmental compliance and maintenance at operational plants remain strong in the sector. Several projects are underway at operational coal-fired power plants to help reduce oxides of nitrogen and sulfur dioxide.
In addition, Industrial Info is tracking more than $1.2 billion in active maintenance projects at U.S. coal-fired power plants set to happen in the future. These projects often require significant repair and overhaul of steam turbines and boilers, necessitating an assortment of new pipe, valves and fittings.
Many of the retiring coal-fired plants are being replaced by large-scale, combined-cycle natural gas-fired plants, providing a boost to the PVF sector. Natural gas-fired plants are springing up for several reasons. With an abundance of U.S. natural gas production, gas prices remain low, and these facilities are comparatively inexpensive to build and operate.
The U.S. Energy Information Administration (EIA) notes that many of the natural gas-fired plants added to the U.S. generation mix in the future will be for newer, advanced natural gas-fired, combined-cycle (ANGCC) units, which have more efficient firing temperatures and advanced-class turbines. Greater use of larger ANGCC designs has led to efficiency gains and larger economies of scale. Of the new U.S. natural gas capacity added since 2016, 31 percent use ANGCC units, the EIA says.
While the construction of new natural gas-fired plants is occurring throughout the country, the largest amount of natural gas-fired project activity (and one of the most active locations for coal-fired retirements) is the Great Lakes market region, which includes Illinois, Indiana, Kentucky, Michigan, Ohio and Wisconsin.
IIR is tracking more than $13.5 billion in active medium- and high-probability natural gas-fired projects in this region, followed by the Northeast market region (Delaware, New Jersey, New York and Pennsylvania), which boasts more than $10.4 billion in active natural gas-fired projects.
Renewable, nuclear energy projects
Among other trends in the U.S. power sector is an increasing amount of renewable energy, particularly wind and solar power. The EIA says that generation from renewable energy sources in the United States surpassed coal-fired power for the first time in April of this year. Hydropower, which uses the most amount of PVF equipment, is expected to retain about a 7-percent share of the U.S. energy mix from 2018 through 2020.
While new-build hydropower projects are few and far between, Industrial Info is tracking several upgrade, modernization, refurbishment and maintenance projects at existing U.S. hydropower plants. The bulk of spending for these projects is primarily concentrated in the Pacific Northwest and Mid-Atlantic regions. Most of the hydropower projects are at traditional, run-of-river hydropower plants.
IIR is tracking some planned new-build project activity at pumped-storage hydropower plants in the United States, in which water is pumped uphill during times of low power demand, then released to power turbines to generate electricity in times of high demand. However, most of these projects, which carry hefty price tags, are rated by Industrial Info as being “low probability,” with a zero-percent to 69-percent probability of being constructed as planned.
While only one grassroot nuclear project is under construction in the United States (Southern Cos.’ Vogtle units 3 and 4 in Georgia), nuclear maintenance is a high-dollar industry sector, which in addition to refueling, often includes inspections and repairs to steam turbines, pressurized water reactors and cooling systems. There are 97 operational nuclear reactors at 57 sites across the United States, the EIA reports. Industrial Info is tracking 50 maintenance projects at U.S. nuclear plants that have been completed or are scheduled to take place in 2019 and 2020.
One area of particular note in the U.S. power sector is the number of project restarts that Industrial Info is tracking. Just because a project is canceled or placed on hold doesn’t mean it can’t be revived; more than $16.8 billion worth of these projects are set to kick off in the United States in 2019 and 2020. While the majority of projects are for wind power, restarts valued at more than $3.3 billion are planned for the natural gas-fired sector, with the highest number and dollar amount occurring in the Great Lakes market region.
As one can see, U.S. power industry project activity remains strong, providing multiple opportunities for suppliers of pipe, valves and fittings. Project trends, including the construction of grassroot natural gas-fired plants and high maintenance project activity at operational plants across all fuel types, will continue necessitating the need for PVF equipment and services this year and in the years to come.