New carbon control policy to boost US gas turbine market

The new EPA guidelines for power plants has probably come at the right time for big companies such as GE and Siemens that seem to have bet on an immediate surge in gas turbine orders through their strong efforts to buy other gas turbine businesses and round out their power range portfolios.

In its new policy, the US EPA has set a target for itself to:

·       Cut carbon emission from the power sector by 30 percent nationwide below 2005 levels;

·       Cut particle pollution, nitrogen oxides, and sulfur dioxide by more than 25 percent as a co-benefit;

·       Shrink electricity bills roughly 8 percent by increasing energy efficiency and reducing demand in the electricity system.

State-Federal partnership

The Clean Power Plan is expected to be implemented through a state-federal partnership under which states identify a path forward using either current or new electricity production and pollution control policies to meet the goals of the proposed program.

The proposal provides guidelines for states to develop plans to meet state-specific goals to reduce carbon pollution and gives them the flexibility to design a program that makes the most sense for their unique situation. States can choose the right mix of generation using diverse fuels, energy efficiency and demand-side management to meet the goals and their own needs. It allows them to work alone to develop individual plans, or to work together with other states to develop multi-state plans.

Flexible timeline

Also included in the proposal is a flexible timeline for states to follow for submitting plans to the agency—with plans due in June 2016, and with the option to use a two-step process for submitting final plans if more time is needed. States that have already invested in energy efficiency programs will be able to build on these programs during the compliance period to help make progress toward meeting their goal.

Among the ones that could immediately face the axe are older coal power plants through the tighter regulations on NOx, SOx and the carbon requirements. The move may have come just in time for the big ones in the business, GE and Siemens, as each have embarked on an ambitious buying spree.

GE and Siemens are competing to buy much of Alstom including its large gas turbine business that does have a foothold in the US. Siemens’ Rolls-Royce acquisition may help it to penetrate the simple cycle peaker market with the Trent machines.