Still-low fuel prices and the advent of renewable energy will be key drivers for the North American energy infrastructure sector next year, according to Fitch Ratings in its 2016 outlook report. 'Renewables are on the rise, and the potential extension of key tax credits could spur more greenfield renewable projects and may help commercialize new technology. However, declining wind and solar capital costs may be sufficient to drive renewables growth even without tax incentives in place,' said Director Christopher Joassin. Fitch's rated renewable portfolio benefits from mostly fixed-price power purchase agreements, thus mitigating price risks and supporting a stable outlook. This development stands to increase pressure on thermal generator margins and dispatch prospects. However, contracted revenues help to curtail cash flow volatility for most thermal power projects, thus supporting Fitch's stable outlook for this sector. The implementation of the Clean Power Plan may initially favor newer thermal generators as less efficient coal-fired units are retired. Longer term, however, these regulations will likely have a negative effect on all fossil fuel-based generation. The oversupply of natural gas will pressure gas prices overall next year, which could curtail new greenfield activity. This is particularly true of liquefied natural gas (LNG) projects, and the economics of many new greenfield LNG projects would be deemed unattractive. A mild winter would also keep gas prices low, while another extreme winter could result in price spikes from short-term demand shocks due to massive storage withdrawals (as could an unexpectedly hot summer). Download Full Report