Design markets in the power engineering industry should see low single-digit growth in 2011 followed by stronger growth in 2012, according to a report from management consultants Farkas Berkowitz & Co. Construction firms serving the same industry saw their revenues decline by 12 percent in 2010 after a 9 percent decline in 2009, according to the U.S. Department of Commerce.
The firm’s 23rd annual State-of-the-Industry Report said that the U.S. power engineering market decreased 6 percent last year after dropping 18 percent in 2009. The firm forecasts that the market will grow 4 percent in 2011 and 15 percent next year.
The report stated that the top five power engineering firms saw revenues from both domestic and foreign projects decline 14 percent last year and 31 percent in 2009. However, those too small to be counted among the top 15 firms saw double-digit growth in 2009 and 2010 with help from growth in transmission and substation work and a more stable market for the environmental permitting of renewables.
The power construction market dropped by 6 percent last year, according to the U.S. Department of Commerce. That reflected the drawdown of backlog associated with the coal-fired power plant build-out. The firm forecasts that construction will continue to drop in 2011 and 2012.
The report also said the down cycle can be contributed to uncertainty of regulations of emissions and many compliance due dates occurring around the same time.
Natural gas from shale deposits are predicted to revolutionize energy markets, the report said.
“Published reserves in North America are sufficient to meet current demand for over 100 years, and many industry insiders tell us that this estimate will double,” said managing director Alan Farkas. “The big oil companies clearly believe in its potential given the investments that Exxon-Mobil, Shell and Chevron have made during the last year in shale gas deposits.”
The advance of renewable and nuclear energy slowed last year, the report said. Only two of the four nuclear power projects that were close to starting construction are forecasted to move forward in 2012 with the other two projects in serious jeopardy. The firm also believes that Congress will not renew tax credits for renewable energy developments this year or next.
Read more financial news