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
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)
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CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
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Copyright Business Wire 2015
Source: Business Wire
(December 3, 2015 - 8:58 AM EST)
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