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LSU Center for Energy Studies Releases Updated Report on Economic Impacts of Independent Power Generation in Louisiana

Despite the recent meltdown of the competitive energy business, Louisiana could realize a total of approximately $4.1 billion in capital investments and the creation of more than 4,963 construction jobs through the continued development of the Louisiana independent power industry. A report from the LSU Center for Energy Studies, The Power of Generation: Continued Economic Benefits from Independent Power Development in Louisiana, updates a previously issued CES report on the economic impacts associated with the development and utilization of independent power providers (IPPs) or "merchant" plants in Louisiana.

The study estimates that the development of these independent power generation facilities is likely to result in:

  • A total capital investment in the state of $4.1 billion by the end of 2005;
  • A likely investment of 7,408 MWs of new and efficient power generation in Louisiana despite the current industry meltdown;
  • An estimated total economic impact associated with the construction of independent power facilities in Louisiana of $1.5 billion by 2005.
  • Total construction employment opportunities of 4,963 jobs. Some 2,408 jobs are associated with the multiplier effects of these construction activities.

Study author, Dr. David Dismukes, noted: "...since our last study, we've known that there were significant opportunities for large infusions of capital into the Louisiana economy from this industry. The real issue on a forward going basis will be whether these new plants will sit idle, or will they be used to replace older less efficient generation in the region." In addition to providing updated information on the economic impact these independent power plants have on the Louisiana economy, the recently released report provides some broad estimates of the potential efficiency improvements that could result from the increased use of these merchant facilities.

The study finds that:

  • There are 12,901 MWs of natural gas fired, utility generating capacity that is operating at a heat rate of 10,000 Btus/kWh or higher. There are 18,958 MWs of natural gas fired, utility generating capacity that is operating at a heat rate of 9,000 Btus/kWh or higher. This compares unfavorably with new natural gas fired, combined cycle merchant generation in the region that can operate in the 6,000 to 7,000 Btu/kWh range.
  • Regional utility generating facilities, including those in Louisiana, are old. Some 73 percent are over 20 years old, while some 43 percent are over the age of 30.
  • There are potentially significant opportunities for independent power facilities to begin to displace older utility generation facilities. Based upon estimates provided in the report, the potential fuel cost savings associated with this displacement are as follows:
    • For the Entergy sub-region as a whole, some $411 million in 2000, $825 million in 2003, and $926 million in 2005;
    • The share of these regional efficiency savings estimates for Louisiana could be as much as $178 million in 2000, $357 million in 2003, and $401 million in 2005.

To download the final report click the link:

The Power of Generation: Continued Economic Benefits from Independent Power Development in Louisiana.