Changes in the Marketplace

Posted on Posted in 2016 Market Change, Prime Power Articles

2016 is shaping up to be an interesting year in the engine-driven generator and power systems world. In general, it appears to be a tougher year than last year.

Crude oil
Crude oil prices are very soft, which impacts a lot of the power systems business in a negative way. Conventional wisdom says that low fuel prices will stimulate the peakshaving side of the business. While that may be true, it seems very slow in coming. Another thing about soft crude oil prices – this seems to indicate or else go hand-in-hand with a strong US dollar. This certainly hurts US power systems companies’ ability to export abroad.

Do we wish for higher crude prices? You better believe it!

Emissions regulations
The diesel power generation business is certainly taking it in the chin these days. With Tier 4 Final emissions regulations finally here, the diesel power gen market is REALLY on the decline. Is it gone forever? It sure seems like diesel is almost the same red-headed step-child that coal has become. I find myself becoming nostalgic for the good-ole days of diesel power generation (when did I get so old?).

A lucky few are able to still build using TPEM (transition program for equipment manufacturers) credits. In this case, these guys are building Tier 2 diesel machines using a “get out of jail free” card. Personally, I can’t stand this business model. It is totally artificial in nature, thanks to the EPA. I don’t begrudge the guys that are in the right place at the right time and can take advantage of the TPEM program. However, it causes a disruption in the marketplace, and the rest of the market somewhat pays a price for this. Hello, Y2K?

What’s the future?
I would hate to offer (natural gas) my personal opinions on this (natural gas) topic. However, (natural gas), I do have some thoughts here. I think NATURAL GAS generator sets are the future.

This topic is interesting on several levels. I tell different people in the industry that I don’t want LEC to be the best “buggy whip” manufacturer in the business. Even though LEC can build a really nice buggy whip, with the finest leather, with the nicest grip, etc., etc, etc. – NOBODY BUYS BUGGY WHIPS! In a very similar way, the industry must move aggressively from diesel power gen to natural gas power gen. And, whether we like it or not, it is.

What does this mean? It is time / high time / past time for US engine manufacturers to start building the finest natural gas engines in the world. Is that the case today? Nope. Not even close. Europe has the #1, #2 and #3 top natural gas engines in the world. I used to work for Caterpillar in the 90’s. I’ve worked extensively with Cummins the following decade. I cannot wait for these two domestic big hitters to offer world class natural gas engine solutions. Would you guys PLEASE get with it!?!

Can LEC help you with your natural gas switchgear needs?
Yes. Give us a try. We are tricky (in a good way). You’ll like what we can do for you.