Rising electricity costs boosted capacity and profitability of power generation
Los Angeles, CA (PRWEB) January 07, 2013
The Waste-to-Energy Plant Operation industry is an integral part of the nation's waste disposal infrastructure and increasingly a source of its renewable energy power. Through the early part of the past five years, the industry struggled through tough economic and regulatory conditions that made substitute landfills and recycling facilities more attractive waste disposal options in parts of the country and caused some firms to struggle with profitability and close facilities. However, renewed public and government interest in the environmental impact of waste disposal and renewable energy generation sparked new investment in WtE facilities and the first return to growth for the industry in more than a decade. Over the five years to 2013, industry revenue grew at a 3.9% average annual rate, including an estimated 2.5% increase in 2013 to about $3.3 billion. Greater capacity, higher waste volumes and higher demand for renewable power were key drivers of industry revenue growth. Additionally, rising electricity costs boosted the number of industry facilities and capacity, while increasing the profitability of power generation for WtE facilities. “Higher fuel prices also increased transportation costs to landfills and made WtE facilities more economically attractive compared to landfills in certain geographic areas, such as the northeast and south,” says IBISWorld industry analyst Nima Samadi. Industry profitability did decline slightly due to competition for trash volumes and pressures on waste disposal pricing from recycling facilities (see IBISWorld report 56292 – Recycling Facilities).
IBISWorld expects the industry to continue becoming an increasingly important and viable source of waste disposal and renewable-energy generation over the next five years. The economic recovery, population growth, increased urbanization and energy demand will increase industry revenue from waste disposal and renewable energy production. Slow rises in electricity and fuel prices, however, along with industry facilities' high construction costs will constrain industry capacity and limit growth. At the same time, new smaller facilities construction with a wider range of WtE technologies will increase. Industry firms will also diversify industry operations into recycling, particularly metals, to diversify revenue streams and improve profitability.
Concentration in the Waste-to-Energy Plant Operation industry is medium. In 2013, the top two companies are expected to account for an estimated 54.6% of total industry revenue. According to Samadi, the establishment of long-term contracts between this industry and downstream customers makes it difficult for new entrants to dilute the market shares of preexisting companies. Concentration is expected to decrease during the five years to 2013, as the number of industry enterprises rises at an annualized rate of 1.9% to 45 total. New entrants will be enticed by favorable regulations that lower the capital costs of constructing a waste-to-energy (WtE) facility. For more information, visit IBISWorld’s Waste-to-Energy Plant Operation in the US industry report page.
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IBISWorld industry Report Key Topics
This industry owns and operates waste combustors, or waste-to-energy plants. Waste-to-energy (WtE) is an umbrella term for technologies that are used to create energy out of waste. These processes might include burning certain types of waste to create electricity or capturing landfill gas and creating energy from the gas captured.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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