Dec 1998

A combination of reforms in state electricity regulation and reducing reserve generation capacity margins, the latter of which led to this summer’s price spike in the Midwest, has led to a boom in power plant development across the US. A large proportion of this proposed capacity is in the form of merchant power plants, all or some of the output of which is not covered by power purchase agreements. The status of this market is reviewed here, and some of the factors influencing the eventual number of such plant examined. John Richardson Raytheon Engineers & Constructors

The ongoing entry of international private capital into nationally- and state-held electricity industries has led to a shake-up in labour relations in the sector. Trade unions are responding to this challenge, and are starting to build relationships with trans-national energy companies which integrate respect for workers and the environment into corporate activities. Alan George Brussels

Power project developers have been drawn to emerging markets in the hope of gaining higher profits from these regions than are available in maturer home markets. The difficulties of bringing projects to financial close are well known to anyone who has tried to establish a private power station in these regions, and lead to long hours and many resources being expended before construction even begins. A new initiative from within the development community is aiming to reduce the delays and frustrations by formulating standard language for the contracts that are necessary for IPPs. Gordon Edge Editor, Power Economics

Due to a strong nationalist history, much of Turkey’s economy is dominated by State Economic Enterprises, and this is especially true of the electricity industry. Despite attempts to introduce private sector capital throughout the 80s and 90s, progress has been slow to date because of legal challenges from opponents of change, which have often been successful. The fate of BOT and BO initiatives is reviewed here, but the conclusion is that fundamental legislative changes are required, which are unlikely in the near future given the fragmented state of politics in the country. S. Gürcan Gülen Energy Institute, University of Houston

It appears that the wind of change has been blowing over France since the summer of 1998. As France races to meet the EU imposed deadline for opening its electricity market to competition, a draft law has been issued in November 1998 and is due to be debated by Parliament in the early days of 1999. In parallel, EDF has been redefining its strategy to be better prepared for competitive markets and become “the leading energy company in Europe”. At the same time, the wind, blowing west from Germany, has been bringing to France the idea that there may be alternatives to nuclear power for generating electricity, and that some diversification in the generation mix might be desirable. Dr Silvia Pariente-David Director, Economics & Analytics, Europe, Hagler Bailly

The highly competitive insurance market is developing innovative ways for companies to manage their risks across the complete range of their activities. A number of these new techniques have been brought together under the title of Alternative Risk Transfer, and they offer the emerging global players in the power industry opportunities to enhance the value of their businesses. Aimed at allowing large customers to exploit the synergies that are available within their companies, electricity companies with world-wide portfolios may find ART gives them a competitive edge. Chris Mundy Client Development & Planning Manager, Sedgwick Limited

The shipbuilding industry is enjoying a boom and the energy industry is driving much of the growth. Martin Clark reports

THE IRAQI oil ministry opened six oilfields to foreign companies yesterday in an attempt to boost production to 4.5m b/d by 2013. The announcement will trigger a rush of bidding by companies eager to tap the world's third largest oil reserves. The ministry also hopes soon to sign short-term agreements with a handful of majors in the interim in an effort quickly to increase production by 0.5m b/d.