AM-98-07 REFINERS AS INDEPENDENT POWER PRODUCERS

Description:

Many U.S. refining companies have formed independent power divisions to promote synergy between operating groups that will enable these companies to take advantage of the world’s growing demand for electric power. The primary focus of these groups has been to develop power projects that utilize worldwide reserves of oil, gas and coal. The global outlook of refining companies, with their long history of overseas presence and access to fuel, are sure to make these efforts successful. In their efforts to enter the global power industry, refiners may be overlooking opportunities in one of the largest electric power markets in the world: the United States. Slow growth in U.S. power demand is changing. By 2015 an estimated 302 GW of additional electric generating capacity, roughly 40% of current nameplate capacity, will be required. Most of this demand will be filled by U.S. and foreign independent power producers (IPPs): New laws, being considered by Congress, will make it possible for IPPs to sell electric power directly to retail and industrial customers. Already California, Pennsylvania, New York, New Hampshire and other states have enacted reforms that will make retail access a reality. U.S. refining companies are strategically positioned to be a major player in the changing domestic market for electric power. This paper will analyze the advantages that permit refining companies to produce electric power in the domestic market at competitive rates.