Thought Leadership

Energy Industry Prospects Look Bright for 2017

Producers and consumers stand to benefit from deregulation and cheaper natural gas and renewables

Energy executives across the country are feeling optimistic as 2017 approaches. The new year will deliver a pro-fossil fuel president as well as favorable economics for renewable energy sources.

It’s a win-win scenario that’s expected to benefit both utility providers and consumers seeking the best “energy mix” to meet their needs and budgets. Industry analysts expect brisk business activity as utilities shift from coal to cheaper and cleaner natural gas and renewable energy sources. In states with deregulated electricity markets, competition will heat up as utilities entice consumers with cheaper electricity options.

President-elect Donald Trump has promised to reduce burdensome and costly regulations on coal, oil, and natural gas producers and approve energy infrastructure projects rejected by the outgoing administration of President Barack Obama.

After eight years of feeling shut out by Obama on discussions of energy policy, executives interviewed by the StateImpact Oklahoma news outlet said they were hopeful the Trump administration would hear their voices.

“What we’re optimistic about is that he is a businessman who gets it. You need the people who are actually doing this activity to have a seat at the table to have the discussion,” said Oklahoma Oil & Gas Association President Chad Warmington. “It doesn’t mean we’re going to get everything we want, but we’re going to have the ability to have some input into those regulations as they come down.”

Thanks to successes with horizontal drilling and fracking, U.S. oil and gas producers are transforming the world market—in November, the U.S. became a net exporter of natural gas for the first time in nearly 60 years, according to the U.S. Energy Information Administration.

But at the same time, renewable energy sources are becoming more and more attractive to U.S electricity providers. According to a recent Bloomberg news article, a West Texas wind farm can be constructed for $22 a megawatt-hour and a solar power plant in Arizona or Nevada can be built for less than $40 a megawatt-hour. Meanwhile, the average lifetime megawatt-hour cost for natural gas plants is $52 and $65 for coal-fired power.

Policy decisions made by the Trump administration may help make fossil fuel costs more competitive with renewables. But it seems both utilities—and their customers—prefer having a number of energy options to choose from.

Frank Prager, vice president of policy and federal affairs for Xcel Energy, Inc., which owns electrical utilities in eight Western and Midwestern states, told Bloomberg News that the company is moving forward with plans to replace some of its coal-powered plants with generation from natural gas, wind energy and solar.

This new era of American energy—from discovery and production to delivery—will have companies seeking an edge to stay ahead of their competition. Many will find that edge by outsourcing non-core business functions to specialist business process outsourcing (BPO) providers such as DATAMARK. Some tasks that can be shifted to outside providers include accounts payable and receivable, collections, and multichannel customer care.

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