Study of Equipment Prices in the Power Sector
Global economic growth, particularly from 2004 to 20071, has fueled an expansion in the construction of industrial, power plant, and manufacturing facilities in the United States and a dramatic escalation in the construction of these types of heavy...
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| Format: | ESMAP Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2009/12/18381976/study-equipment-prices-power-sector http://hdl.handle.net/10986/17531 |
| Summary: | Global economic growth, particularly
from 2004 to 20071, has fueled an expansion in the
construction of industrial, power plant, and manufacturing
facilities in the United States and a dramatic escalation in
the construction of these types of heavy construction
projects overseas. In addition, the increase in demand for
oil by rapidly growing countries such as China and India and
the falling value of the dollar has resulted in an
unprecedented rise in the price of oil. This has
significantly accelerated oil exploration and resulted in
capacity-expansion projects at existing oil refineries. The
combination of power plant, infrastructure, and oil-related
projects has resulted in significant growth in demand for
boilers, rotating equipment, piping, structural steel,
concrete, electrical components, and electric wiring. In
light of this finding, this study compared the cost of power
plants without market demand to the actual costs incurred in
constructing power plants. The results indicate that owners
are purchasing plants in a sellers' market, where
unprecedented demand has resulted in market price premiums
in the range of 15 percentage points above material,
equipment, and labor escalation. |
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