Is There a Future for IPPs?

Authors

  • Leonard S. Hyman Senior Industry Advisor Smith Barney

DOI:

https://doi.org/10.13052/dgaej2156-3306.1224

Abstract

Technology made the old system. Technology will kill the old
system. For eight decades, electric utilities ran unchallenged natural
monopolies, because they possessed economies of scale. No organiza-
tions could produce electricity at lower cost than those monopolies .
Operating economies increased steadily. The utility, not only more
efficient than erstwhile competitors, grew more efficient over time .Cl)
Circa 1960, conventional power stations reached the efficiency
limits imposed by the Rankine Cycletz), a necessary but not sufficient
reason to declare the natural monopoly dead . Utilities, after all, still
provided the lowest cost service. Nobody else could undercut them .
About the same time, electrical equipment manufacturers began
to sell gas turbines as stationary power sources. Most utilities did not
take seriously the new technology. Of course the Big Three did not take
the first Toyotas seriously either, probably for the same reasons: tinny
stuff with a limited market .
After much R&D work, manufacturers developed clean, low-cost,
reliable gas turbines . The same manufacturers that produced genera-
tion after generation of increasingly efficient conventional steam gen-
erators proceeded to do the same with gas turbines, except on a more
accelerated schedule. Eventually, those small, modular, clean, factory-
made gas turbines could produce electricity at a lower cost than that of
the larger units of many utilities.

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Author Biography

Leonard S. Hyman, Senior Industry Advisor Smith Barney

Leonard S. Hyman, CFA, is a senior industry advisor to Smith
Barney. Previously he was managing director of Fulcrum Interna-
tional Ltd ., as well as an independent consultant specializing in the
economics and finances of energy and telecommunications utilities.
From 1978 to 1994, as head of the Utility Research Group and
first vice president at Merrill Lynch, he supervised and maintained
equity research on foreign and domestic energy and telecommunica-
tion utilities. He was a member of privatization teams for offerings of
British , Spanish , Mexican, Argentine and Brazilian utilities and con-
sultant for other restructuring studies . Prior to joining Merrill Lynch,
he was a partner at a New York Stock Exchange member firm and an
officer at Chase Manhattan Bank .
Mr. Hyman has written and spoken on utility finance and deregu-
lation, presenting papers on three continents. He has testified before
Congress, served on four advisory panels for the U.S. Congress Office
of Technology Assessment, and on one for the National Science Foun-
dation. He was a member of task forces on electric utility efficiency for
Pennsylvania and on fusion and other energy sources for NASA. He is
on advisory boards for the Electric Power Research Institute and
EXNET, and on the editorial board of Forum for Applied Research and
Public Policy.
Author of America's Electric Utilities : Past, Present and Future,
co-author of The New Telecommunications Industry Evolution and
Organization and editor of The Privatization of Public Utilities, he has
contributed to other books and to professional journals.
For more than a decade, Mr. Hyman was cited by Institutional
Investor as one of the leading research analysts in his field. He is a
Chartered Financial Analyst (CFA). He holds a BA from New York
University, where he was elected to Phi Beta Kappa , and an MA in
economics from Cornell University, where he majored in industrial
organization and minored in Latin American studies. He speaks Span-
ish and Portuguese.

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Published

1997-03-22

How to Cite

Hyman, L. S. . (1997). Is There a Future for IPPs?. Distributed Generation &Amp; Alternative Energy Journal, 12(2), 27–35. https://doi.org/10.13052/dgaej2156-3306.1224

Issue

1997: Vol 12 Iss 2

Section

Articles