Cost Insights
by PowerAdvocate

Intelligence for energy companies seeking a data-driven approach to cost management

Solar Tariffs Expected to Impact Costs for Solar Projects: How to Mitigate, Plan, and Prepare 

February 26, 2018 at 2:49 PM / by Samantha Walter & Justin Steimle posted in Cost Reduction, Industry Insights, Utility, Capital Projects, Data and Analytics, should-cost, solar

Higher prices are on the horizon for utility-scale solar projects due to tariffs and quotas recently approved by President Trump. This new legislation could seriously impact financial plans for solar projects, but expertise in capital projects, specifically renewable projects, can help utilities, EPCs, and developers mitigate these costs and prepare for future changes.

Why are the rules changing?

In September, the International Trade Commission (ITC) determined that U.S. solar manufactures experienced significant injury due to imports of crystalline silicon photovoltaic (CSPV) solar cells and modules. This investigation stems from the United States’ Global Safeguard law, where an industry representative may petition the ITC to determine if imports are causing “serious injury” and recommend remedies. The petition was filed by the recently bankrupted Suniva and later joined by SolarWorld.

On January 22, the Trump Administration followed through with the recommendations from the ITC and imposed a four-year solar import tariff that will start at 30 percent in the first year and gradually drop to 15 percent. This tariff will apply to all CSPV solar cells and modules that are imported into the U.S. There is a quota specifically for solar panel cells which excludes the first 2.5 GW of cells imported into the U.S. each year, but the details on how the quota will apply remain undetermined. Like the tariff, the quota will last four years.  All countries are included except for Generalized System of Preferences (GSP) beneficiary countries, which account for less than three percent of total imports.

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Section 232 Threatens Steel and Aluminum

February 23, 2018 at 4:49 PM / by Jaclyn Tran posted in E&P, Utility, Midstream, Downstream, power, upstream, steel, tariffs, imports, aluminum, Section 232

UPDATE: In a surprising move, President Trump announced on March 1 that he intends to impose sweeping 25% tariffs on steel imports and 10% tariffs on aluminum -- the most severe of the potential trade remedies recommended by the Department of Commerce. Details of the plan are still unknown, but the announcement has already driven dramatic steel and aluminum price increases and spooked equipment manufacturers. Register for our March 13 webinar for the latest updates on Section 232.  

Read on for our initial analysis of the Department of Commerce's recommendations.

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What Utilities Need to Know about Energy Storage Cost Drivers

November 27, 2017 at 4:31 PM / by PowerAdvocate posted in Cost Reduction, Utility, Cost Transformation, Data and Analytics, should-cost

More likely than not, your utility is already or soon will be procuring battery energy storage as part of its grid modernization strategy. In fact, according to BCC Research, the global market for grid-scale battery storage technologies is projected to reach nearly $4.0 billion in 2025, up from $716 million in 2015.  Battery costs have fallen dramatically over the past decade. However, events in the Democratic Republic of the Congo are putting the brakes on further cost reductions. Here’s a look at what’s happening and how you can approach your battery procurement planning in light of these events.

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Navigating Harvey's Aftermath: How Supply Chain Can Manage Market Risks

September 22, 2017 at 4:42 PM / by Toby Kearn and Jaclyn Tran posted in Cost Reduction, E&P, Utility, Midstream, Downstream

As the Texas and Louisiana Gulf Coast recovers from Hurricane Harvey, Supply Chain organizations face the challenge of navigating its effects, from chemicals to logistics to labor.

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Why Your Utility Should Do Should-cost Analysis

September 21, 2017 at 7:09 AM / by Kristen Brewitt posted in Utility, Cost Transformation, Supply Chain Transformation, Data and Analytics, should-cost

Do you manage a utility supply chain, procurement process, or supplier relationships? Or collaborate with and depend on teams that do? If so you know how heavy a lift it can be to effectively manage asset-intensive energy sector costs. Should-cost analysis helps address two key challenges that get in the way of delivering even more value for your organization.

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Will New Sand Mines Crash the Proppant Market?

September 18, 2017 at 6:52 PM / by Toby Kearn and Rasha Atwi posted in Cost Reduction, E&P, Midstream, Downstream

Key Takeaways

  • Since last fall, a surge in drilling and completions activity in the Permian Basin has led to a dramatic increase in sand demand and, in turn, substantial sand price inflation.
  • In response, sand mining companies have begun investing in a slew of new mines in the area.
  • While new sand mines will deepen the market’s oversupply, prevailing logistical bottlenecks will likely prevent significant sand price deflation from occurring.

Sand Demand and Sand Price Inflation Since Last Fall

Demand for sand used in oil field operations plummeted after the oil-price crash in mid-2014 and the subsequent sharp drop-off in well completions activity. This trend, however, has recently reversed. Since late 2016, a surge in drilling activity in the Permian, coupled with the activation of drilled-but-uncompleted wells (DUCs), has led to a massive increase in sand demand in the basin (Figure 1). During the first half of 2017, total US sand proppant demand was 63 million tons per year, a 75% increase over 2016 levels.


Figure 1: Permian Basin Sand Demand

Figure 1a.png

Sources: United States Energy Information Administration, Baker Hughes, PowerAdvocate


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How Oil Price Spreads Have Changed Refiner Crude Sourcing Strategy

August 4, 2017 at 10:08 AM / by Toby Kearn and Nicole Hamilton posted in Cost Reduction, E&P, Midstream, Downstream

Over the last five years, the United States has significantly increased its production of oil and natural gas, a phenomenon referred to as the Shale Revolution. US crude oil production has increased substantially, especially in the inland parts of the Gulf Coast and Midwestern states (Figure 1). This shift has impacted the economics of downstream operators; however, the benefits for specific refineries have varied depending on location and refinery crude slate.

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[Webinar] Buckeye Partners Presents: Driving Out Cost with Data

July 11, 2017 at 2:00 PM / by PowerAdvocate posted in Cost Reduction, E&P, Midstream

Buckeye Partners presents a webinar in our Q&A with the Experts series. 

In this webinar recording, Buckeye Shares:

  • How they've used data to achieve >$10M in cost reduction through improved supplier negotiations and bids
  • Specific strategies they've used across CapEx and OpEx categories
  • How they've prioritized and executed on specific cost reduction opportunities
  • And lots more... 

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Annual Oil & Gas Executive Forum: The Highlights

July 7, 2017 at 3:01 PM / by PowerAdvocate posted in Cost Reduction, E&P, Midstream, Downstream

We’re thrilled to share that more than 60 Oil & Gas executives attended our Annual Oil & Gas Executive Forum on June 22, for our best event yet.

The 2017 Executive Forum provided a platform for sharing and discussing new cost-cutting strategies

2017 Executive Forum

Each Executive Forum is designed to enable operators to exchange innovative approaches to cost reduction with one another. This year’s event featured:

  • A keynote speech by the Vice President of Global Supply Chain at Hess Corporation
  • Spotlight presentations on pressing Supply Chain concerns led by 7 industry leaders:

A New Mindset for a New Market. Former CEO of Maersk Oil Houston discussed the importance of cost control in Oil & Gas and provided a new perspective on the market

Cost Reduction in Practice. Director of Strategic Sourcing at DCP Operating Company, Sr. Commercial Manager at Motiva Enterprises, and Head of Procurement at Jonah Energy shared how supply market insight and data were used to decrease their operating costs

Cost Reduction Outside the Box. Vice President of E&P Services at WPX Energy and Head of Procurement at Statoil explained how rising costs were averted by their companies

Elevating Costs. Director of Supply Chain at Southwestern Energy spoke about the factors that drive business unit engagement and their effects on category management success

  • Networking opportunities that brought together over 67 executives across 38 firms

A keynote speech on current economics of Oil & Gas and how to envision Supply Chains of the future

Keynote Speech

We want to extend our gratitude and appreciation to all who attended the Forum and shared their perspectives on the Oil & Gas market. If you would like more information about any of the presentation topics, please send us an email at costinsights@poweradvocate.com.

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Supply Chain, Finance & the Data Analytics-driven Utility Future

June 29, 2017 at 8:19 AM / by Kristen Brewitt posted in Utility, Cost Transformation, Supply Chain Transformation, Data and Analytics

The Chief Procurement Officer’s organization has become a central driver of utility competitiveness and operational efficiency. During the EEI Annual Conference 2017 in Boston earlier this month, we had a number of discussions with CFOs around how Finance and Supply Chain can collaborate more closely to drive enterprise-wide value and efficiencies. Here's what we're seeing.

 Get the eBrief

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