A research report came out this morning on the merchant generation power markets from Merrill Lynch. The link is provided below.
Merrill Lynch analyst Elizabeth Parella has apparently completed her annual detailed report on Annual Power Markets. What I believe to be the SUMMARY to that much lengthier report is linked here: Summary of Merrill Lynch's Annual Power Markets report. This link is likely only effective for a couple of weeks before going dead.
I will not go through the summary in detail here -- follow the link. But Ms. Parella usually does an EXCELLENT job with this annual study, and is one of the finest Independent Power Producer and Merchant generation analysts on Wall Street (maybe THE finest), so her conclusions are always worth reading, whether you agree or disagree.
Merrill Lynch's basic premise in the report is that the merchant and power generation markets trough was in 2004, and modest recovery has been, or will be, seen this year and next year. And the evidence cited includes how much excess capacity there is, power plant sale values, and sparks spreads (the spread between the cost to generate the power and the price you can get paid for the power ... basically a gross margin) in different regions.