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 December 3, 2015 - 8:58 AM EST
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Fitch: Renewables, Low Fuel Prices to Drive North American Energy Infrastructure in 2016

Still-low fuel prices and the advent of renewable energy will be key drivers for the North American energy infrastructure sector next year, according to Fitch Ratings in its 2016 outlook report.

'Renewables are on the rise, and the potential extension of key tax credits could spur more greenfield renewable projects and may help commercialize new technology. However, declining wind and solar capital costs may be sufficient to drive renewables growth even without tax incentives in place,' said Director Christopher Joassin. Fitch's rated renewable portfolio benefits from mostly fixed-price power purchase agreements, thus mitigating price risks and supporting a stable outlook.

This development stands to increase pressure on thermal generator margins and dispatch prospects. However, contracted revenues help to curtail cash flow volatility for most thermal power projects, thus supporting Fitch's stable outlook for this sector. The implementation of the Clean Power Plan may initially favor newer thermal generators as less efficient coal-fired units are retired. Longer term, however, these regulations will likely have a negative effect on all fossil fuel-based generation.

The oversupply of natural gas will pressure gas prices overall next year, which could curtail new greenfield activity. This is particularly true of liquefied natural gas (LNG) projects, and the economics of many new greenfield LNG projects would be deemed unattractive. A mild winter would also keep gas prices low, while another extreme winter could result in price spikes from short-term demand shocks due to massive storage withdrawals (as could an unexpectedly hot summer).

2016 Outlook: Energy Infrastructure North America is at 'www.fitchratings.com' or by clicking on the above link.

Additional information is available at 'www.fitchratings.com'.

2016 Outlook: Energy Infrastructure North America (Contracted Cash Flows Mitigate Tepid Energy Demand Growth)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=874295

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Fitch Ratings
Christopher Joassin
Director
+1-312-368-3166
Fitch Ratings, Inc.
70 W. Madison St.
Chicago, IL 60602
or
Yvette Dennis
Senior Director
+1-212-908-0668
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com


Source: Business Wire (December 3, 2015 - 8:58 AM EST)

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