Winning in electricity generation
- McKinsey & Co., Los Angeles, CA (United States)
- McKinsey & Co., San Francisco, CA (United States)
- McKinsey & Co., Toronto (Canada)
Should you be a buyer or a seller of generation? In general, spot buyers should do very well, while many generation owners will be fortunate to recover their stranded costs. Successful generators will capitalize on superior operating performance and market knowledge. The smartest natural gas strategy in the early 1980`s was to short natural gas. Will this lesson of restructuring be written again of the electricity generation business of the late 1990`s? The authors will examine whether and how winners might emerge in the generation business of the future. The U.S. electric generation market, already marked by intense competition for new capacity and industrial demand, will become even more competitive as it makes the transition from regulated local monopoly to marketbased commodity pricing. At risk is up to $150 billion of shareholder equity and the future viability of half of the country`s investor-owned utilities. The winners in year 2005 will be those who early on developed strategies that simultaneously recovered existing generation investments while restructuring their asset portfolios and repositioning their plants to compete in the new market. Losers will have spent the time mired in indecision, their strategies ultimately forced upon them by regulators or competitors.
- OSTI ID:
- 447679
- Journal Information:
- Electricity Journal, Vol. 9, Issue 7; Other Information: PBD: Aug-Sep 1996
- Country of Publication:
- United States
- Language:
- English
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