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June 2011
Power Player
By Amanda Pagliarini

     The Shaw Group has been a growing force in the Charlotte business community since expanding its uptown operations in 2005. When Shaw’s Power Group named Charlotte as its new headquarters in 2007, it confirmed the Charlotte region’s transformation from longtime banking center to burgeoning hub for power generation, alternative energy and energy-related manufacturing companies.

     Charlotte has been very successful in attracting energy industry headquarters. Notable firms like Shaw, Siemens and Areva have either relocated their operations to Charlotte or greatly expanded them. Charlotte is the global headquarters for Duke Energy, which after its purchase of Progress Energy is, will be the largest utility company in the U.S.

     As a matter of fact, according to the Charlotte Regional Partnership, there are more than 240 energy companies with a presence in Charlotte employing over 27,000 people locally. Other industry leaders include Toshiba, Westinghouse, Babcock and Wilcox, and URS. As a consortium, they enjoy the synergistic gains of a larger talented work pool, the collaboration on ideas at a more industry-sophisticated level, and the symbiosis that comes with working in tandem on energy projects.

     For Shaw, with transactions national and international in scope, locating its Power Group headquarters in Charlotte also made sense geographically. Historically, the power business in the U.S. has focused on the retrofitting of existing plants. The area most receptive to the power industry transition to nuclear and new nuclear has been the large area from the Midwest into the Southeast.

     Charlotte is right in the middle. It was the geographic center for where the business would be,” says Clarence Ray, Chief Executive Officer of Shaw’s Power Group. Ray adds that Charlotte has a growing presence of engineering talent and is a prime area for attracting talent.

     Shaw’s Power Group occupies several floors of the First Citizen’s Building on Tryon Street with roughly 1,150 employees. In December of last year the company announced plans to hire an additional 225 people; a plan that has since slowed down due to the nuclear issues in Japan following the earthquakes and tsunami. But Ray says that hiring will resume as anticipated as they continue to learn more about what happened in Japan and how to address it moving forward.

 

Tapping a Charlotte Resource

     When Shaw went looking for new leadership for its power segment, it didn’t have to travel very far to find Clarence Ray, who had started his long-standing career in power generation right here in the Queen City.

     According to Ray, 1970 was the only year Duke Power actively recruited at Old Dominion University. Some might say that this random occurrence was a fateful formula for both him and the industry he would come to serve. Out of it came a 40-year (and counting) career for Ray, and 40 years of immeasurable contribution for the energy sector.

     Over the next 37 years, Ray navigated through various reorganizations, regulations, consolidations, and mergers at Duke. In 1989, he was named vice president of engineering for Duke/Fluor Daniel; in 1992, senior vice president of projects; and in 1993, president and CEO.

     Then in 2001, Ray was appointed president and CEO of Duke Energy’s generation services. In 2003, he was named Duke Power’s senior vice president of fossil-hydro generation; in 2004, executive vice president of procurement, construction and environmental, health and safety; and finally, Duke Energy’s group vice president of construction and project management following the merger with Cinergy.

     In February of 2007, just weeks after retiring from Duke Energy, Shaw’s Power Group named Ray as executive vice president to oversee all business development initiatives and risk management programs. In 2010, Ray was appointed chief executive officer of Shaw’s Power Group.

     With increasing opportunities in nuclear construction, environmental retrofits and building natural gas plants, Ray’s change in title evidenced Shaw’s desire for stronger and clearer lines of authority in its fastest-growing division.

     Says Ray, “It was more than a change of title. We are changing some of the fundamentals of the organizational design. We’re blurring the line between our fossil organization, our nuclear organization and our plant services organization.”

     Shaw’s Power Group is the largest of Shaw’s core groups, accounting for close to one-half of the company’s total revenue. Delivering services to the fossil, nuclear, and renewable power industries, the company is able to achieve vertical integration through Shaw’s pipe, steel, and ductwork fabrication capabilities, creating a unique position in the power industry.

 

The Power Business

     Shaw offers a premier portfolio of nuclear, fossil and renewable power expertise, delivering safe, efficient and clean energy solutions, both domestically and internationally.

     Together with Westinghouse, Shaw is contracted to provide engineering, procurement and construction services for the world’s first AP1000 nuclear power plants, including four units in China and six new nuclear units in the U.S.

     Westinghouse’s AP1000 is widely adopted and considered to be one of the safest and most economical nuclear technologies available in the worldwide commercial marketplace. AP1000 is the only Generation III+ reactor to receive Design Certification from the U.S. Nuclear Regulatory Commission (NRC).

     Additionally, Shaw recently expanded its global strategic partnership with Toshiba, signing a commercial relationship agreement to become the exclusive engineering, procurement and construction contractor for Toshiba’s Advanced Boiling Water Reactor (ABWR) nuclear power plants worldwide, excluding Japan and Vietnam.

     Shaw is also recognized in the power industry for improving the efficiency, capacity output and reliability of existing nuclear plants through uprate projects. Ray explains, “The process of increasing the maximum power level at which a commercial nuclear power plant may operate is called a power uprate. These carbon-neutral uprate projects represent a competitive cost alternative to new plant construction and an important component in the expansion of domestic power generation.”

     From building new plants to retrofitting existing plants for modernization and clean-air objectives, Shaw delivers a broad array of services to the fossil power industry. Shaw is currently ramping up on gas projects with a focus on combined-cycle combustion turbines, advanced gas-turbine technology, and module construction and delivery. As a full-service engineering, procurement and construction organization, Shaw also provides air quality control needs on new and existing units, enabling clean, efficient and economical electricity generation.

 

Powerful Lessons of Japan

     The devastation at the Fukushima Daiichi nuclear power plant in Japan back in March has caused concern and demand for reevaluation of power plant safety worldwide. But both Ray and Jeffrey Merrifield, a senior vice president of Shaw’s Power Group, are convinced that it is precisely because of recent tragedies that we are better equipped to handle unanticipated challenges.

     As a result of 9/11, Hurricane Katrina, and the country’s overall proactive stance in minimizing opportunity for terrorist attacks, nuclear plants in the U.S. have undergone more maintenance and testing than in Japan. For instance, Ray points out that Japan did not look at the possibility of losing backup power—a study that has been done here as a result of 9/11 reevaluations.

     Ray and Merrifield are clear that the Fukushima Daiichi plant was affected by the tsunami, not the earthquake. The design basis followed worldwide for nuclear plants can sustain the effects of an earthquake of that magnitude.

     Ray also asserts that the age of the Fukushima plant was not a factor in the incident. “Nuclear plants are some of the best maintained facilities in the world. A lot of capital is spent to keep them in top condition,” he says. With regard to backup power, Ray explains that most of our diesel tanks are underground, which ensures they are protected in a way that Japan’s were not.

     Overall, the two men describe a global community and shared sense of responsibility felt by those working in the power business. Ray tags it “accountability,” felt not just by executives of energy companies, but by engineers who work in the industry.

     “As soon as we were allowed to,” says Ray, “we put engineers on a plane to Japan to go help. We had no contract or business there—we just knew we had to go help.”

     Ray and Merrifield predict that over the next several months, the industry will continue to learn lessons from Japan and will adjust its policies and standards accordingly. Speaking again to the industry’s accountability, Ray bluntly notes, “When someone turns a valve wrong, the whole industry hears about it so we can learn from it.”

 

Politics and Power

     Merrifield, who served two terms (1998 to 2007) as a Senate-confirmed commissioner of the NRC, points out electricity’s role in local development: “With accessible, affordable electricity came widespread air conditioning—a critical necessity that allowed Southern states to grow. Because of the electrical infrastructure created by Duke Power, the Charlotte region benefits from some of the lowest cost power in the country.”

     Both he and Ray feel government is holding back energy progress by making judgments instead of making policies. “Whether state or federal, there is too much politics involved in something absolutely critical to our country—reliable, affordable electric power is essential not just to our economy, but for our security,” says Ray.

     Ray believes we need to adopt energy policies that address generational and environmental mix. Rather than be encumbered by debates of individual projects, Ray believes government needs to set policies and regulations and then let the industry go to work.

     At a recent nuclear conference in Florida, Ray learned new information about China’s progress that he found alarming. During the conference, attendees were shown visuals of 10 sites where China is currently doing earthwork on new nuclear. Ray says that if people could see how far China is surpassing us when it comes to infrastructure, it would scare them.

     “It’s very scary to watch China invest in its infrastructure while we watch ours deteriorate. People don’t appreciate the connectivity of that infrastructure and the economy,” he warns.

 

Powerful Energy Hub

     To Ray, the Charlotte region becoming a new hub for the energy industry “is a reality that began long ago.” He says, “Now it’s being encouraged and acknowledged.”

     Ray does point out one disconnect in the region’s push to become an energy center: North Carolina is one of the only southern states that doesn’t support construction work in progress (CWIP). CWIP is an accounting system which makes it more economical for utilities to build new projects.

     “There’s a contradiction in bringing nuclear jobs to this area when the state does not support construction work in progress which would increase the demand for jobs.”

     Shaw’s Power Group is very active with local universities, enforcing the need for civil and mechanical engineers—for those who are able to build systems. Surprisingly, Ray says his greatest work force concern is in the lack of craft and construction-based workers.

     “We’re trying to educate people that construction is a good paying job with lots of opportunities for promotion.” Ray says.

     When it comes to Charlotte’s position, Ray says that the progression to becoming an energy capital was an organic one. “But now there is more planning and resources to support that growth.”

     Echoing Ray, Merrifield says, “This is now an area where you can do energy deals. In the last several years, energy companies have realized, ‘If we want to be part of the action, we need to have a presence in Charlotte.’”

diversity back to the urban soil.

 

 

Amanda Pagliarini is a Charlotte based freelance writer.
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