POWERFIN - Power Project Economics
As the electric markets deregulate, utilities
need to clarify the real cost of generation and the market value
of generation assets. The cost of generation is significant not
only to customer retention strategies, but also to developing new
"The future isn't what it used to
be", said Yogi Berra. Nowhere is this more true today than
in the electricity utility markets. To retain existing customers,
utilities not only need to assess their regional competitors, but
also customer's self generation threats. In the process,
utilities may develop new opportunities.
Opportunities will include building or
acquiring power projects. In the emerging competitive
marketplace, traditional rate based, busbar costs hold only
historical significance. Looking ahead, the cost and value of
power generation projects should be viewed differently, closer to
the approach used by the independent power industry. The
independent approach views power projects as stand alone
businesses. They have the tools to accurately evaluate existing
and new projects. Do you?
Beyond new project development, existing
utility customers may revisit cogeneration or self generation
options to establish negotiation positions with utilities. Here
too, there is a demonstrated need for utilities to accurately
evaluate project economics.
POWERFIN is a consultative process that
utilizes a comprehensive computer model designed to evaluate and
clarify power project investment decisions. The product provides
salient guidance on: "greenfield" project development;
existing plant valuation; plant refurbishment and modifications;
as well as power plant acquisitions. The objective of this tool
is to screen and analyze all facets of power projects, providing
a complete project economics picture.
Part of the value of POWERFIN is the
"process". In using POWERFIN, all relevant aspects of
power projects must be addressed. The beginning process is
rigorous but enlightening. The goal of the process is to
establish a credible base case of assumptions from which sage
management decisions can be made.
POWERFIN is also flexible. It allows
preliminary economic screening as well as detailed financial
guidance. In other words, this product can accomplish "quick
and dirty" screening as well as provide support for detailed
bank financing requirements.
Specifically, POWERFIN provides a detailed
breakdown and multiple scenario evaluation options for critical
project issues including capital, construction & start-up,
fixed & variable O&M, alternative financing scenarios,
tax considerations, fuel options, technical parameters, and
dispatch implications. In addition to detailed project economics,
POWERFIN provides automated graphics and rigorous sensitivity
Functionally, POWERFIN is a powerful tool for
project development, rate design, contract negotiations,
financing, acquisitions, and dynamic economic evaluation.
Our consultants work with project development
and senior management to define and develop the goals and
objectives of the project opportunity. In the process, a
strategic review is accomplished and the project boundaries are
determined. From here, engineering, fuel supply, plant
operations, and finance personnel are consulted as appropriate to
develop a "base case" set of assumptions. The
preliminary base project economics emerge along with critical
assumption sensitivities. Vantage consultants work with project
development and senior management to successful guide the project
The benefits of owning and using this product
are both quantitative and qualitative. On the qualitative side,
confidence and salient guidance provided to senior management
through use of a proven, comprehensive tool can be invaluable.
Quantitatively, this product can substantially minimize a
utilities' project development costs by quickly and accurately
providing a total project economic picture.