Chemical, power firms team up in cogeneratio

Abstract

US chemical producers are more eager than ever to free up any available capital by shedding operation that are not central to their businesses. As part of this soul searching, chemical companies are questioning whether they should continue to invest the time and tie up capital necessary to operate on-site power generation facilities. Many chemical firms have long produced their own power through the process of cogeneration--which allows for the simultaneous production of electricity and steam from the same energy source--because it provides reliable power at low cost. But in this back-to-basics environment, petrochemical producers want the benefits of self-generation without the headaches. Recognizing this, electric utilities are spinning off independent power subsidiaries. These companies can venture out of the utility's traditional service area to aggressively seek to own or operate cogeneration facilities and then supply other companies with an economical source of power. Providing such services is an attractive way for power companies to diversify their business and buoy return on investment enough to satisfy restless shareholders. Companies in the chemical and related industries pose a prime opportunity because their plants have relatively large requirements for both electricity and steam. As these two trends converge, industry consultants predict anmore » increasing number of chemical and power companies will form mutually beneficial partnerships.« less