2005 Power Industry Forecast Outlines Healthy Capital and MRO Spending Outlook for North America

Despite the decline in new generating unit development spending, the power industry is expected to remain healthy and is expected to continue to lead other industrial segments in investment dollars spent in 2005. Over half of the project activity originally projected to kick off during 2004 was either cancelled, or delayed until later years. Early 2004 projections had the industry exceeding $91 billion, but by the beginning of the fourth quarter power industry capital spending was adjusted to just over $21 billion. In contrast, major maintenance spending remained steady with $2 billion completed or underway by the end of the year.

The outlook for 2005 seems to be a mirror image of 2004. Currently, over 600 capital projects valued at $95 billion have been identified to potentially kick off this year. Industrialinfo.com estimates that as much as 78% of the total value of these projects will drop out as a result of cancellations and delays. The year should end with approximately $20.9 billion in total capital spending for 2005.

Maintenance spending is expected to remain healthy with 436 projects valued at over $1.8 billion expected to kick off this year. Overall the North American Power Industry is expected to have a healthy year for capital and maintenance spending as new generation, environmental compliance, plant upgrades and modernization and renewable fuels projects lead the way.