This Market Insight analyzes policy drivers and market fundamentals influencing water management in the U.S. power sector. The report includes state-by-state analysis of new thermal power plant capacity additions that are driving investments in water treatment plants, along with forecasts of water-related CAPEX in the U.S. power sector from 2015-2025.
The report breaks down the power sector’s water use by fuel mix and details leading power production companies and markets with planned capacity additions.
- Shale gale underpins fuel switching and greenfield opportunity for water players. The 79% declines in natural gas spot prices since 2008 have emboldened U.S. independent power producers and utilities to expedite retirement of as much as 20.4 GW of coal-fired power plants to rely more heavily on natural gas. This transition is driving deployment of more water efficient natural gas replacement and greenfield plants across as many as 32 states.
- EPA Effluent Guidelines to drive more than US$2.5 billion water related spend. A September 2015 ruling by EPA to rein in key pollutants from power systems has laid the groundwork for water system upgrades to more than 12% of U.S. power fleet over 50 MW. The lion’s share of this investment, to occur between 2019 and 2023 during NPDES permit renewals, will take place in coal-rich Mid-Atlantic and Midwestern states, where Bluefield has identified 204 facilities and plant owners.
- Drought, local conditions advancing alternative water solutions in power. Between California and Texas, which represent almost 20% of the announced power pipeline, risks to water supplies are forcing project developers to evaluate wastewater reuse as an alternative source. The opportunity for water suppliers is not limited to the drought-stricken western states. More recently power plants in Pennsylvania and Maryland moved forward with wastewater reuse and zero liquid discharge solutions to meet localized and plant requirements.
- Mature power sector to lean on established water firms. Bluefield’s ten-year capital expenditure forecast, totaling US$3.1 billion, demonstrates significant upside for water treatment in the U.S., of which the majority will be captured by established players like water players GE, Veolia, and Aquatech. New market entrants will be forced to break through by way of entrenched EPC firms already active in the U.S. (e.g. Bechtel, Fluor, Kiewit).