CEI

Competitive Energy Insight, Inc.

Phone: (858) 566 - 0221

Fax: (858) 566 - 0287

info@ceinsight.com

INDEPENDENT POWER

Utility Owned Power Plant

The independent power industry has evolved substantially since the early PURPA days when the first investments in private power projects were made.  In the early years of PURPA power projects were limited to cogeneration applications requiring at least 5% thermal usage by a host, and energy was purchased from utilities based on a "Avoided Cost" methodology. Later during the mid-1990’s there was an emergence of privately owned central power station investments, primarily natural gas fired power plants and a few coal projects.  Then late in the 1990’s and the first part of the 2000's came turmoil and bankruptcies that took major Independent Power players out of the market.

Now, private ownership of power generation assets has reemerged and refocused on a new class of project developers and a complete new set of technologies of choice, spirited by the need for clean renewable energy and national energy independence.  Most of these projects are founded in negotiated power purchase agreements.  This has prompted the rapid emergence of renewable technologies like wind solar thermal, solar photovoltaics, geothermal and biomass, central power station applications like clean coal technologies and nuclear power, and transporation fuels applications like ethanol and biodiesel. 

The passage of the Emergency Economic Stabilization Act of 2008, H.R. 1424, in October of 2008 fostered extensions of key incentives for renewable energy applications and new incentives for clean coal, raising further the importance of an accurate understanding of the economic drivers and risks associated with investments in independent power projects.  These include production and investment tax credits, emissions offset credits for greenhouse gasses and other incentives.  The EconExpert Modeling Suite and CEI's services practice are uniquely positioned and ready to address all of the development and financial challenges faced by parties interested in the economics, project development and financing of independent power projects.  Factors addressed in the models include: 

    • Project schedule

    • Technical and production parameters for the facility

    • Operating expenses 

    • Revenues including forward price forecasts for electricity, time-of-production considerations, renewable energy credits, capacity paments, etc.

    • Project development expenses

    • Capital investment requirements

    • Financing costs and other “soft cost”

    • Risks associated with changes in debt, tax equity and private equity markets

    • Tax incentives and techniques for monetizing and allocating those incentives

    • Entity structures (partnerships, on/off balance sheet, C-Corp., operating leases, capital leases or other)  

Solar Thermal IPP
 

All of these factors will have a direct impact on the economic feasibility and risk associated with investments in independent power projects. Whether you’re investing in, operating or selling equipment to the energy projects, fully understanding the related technical and economic issues associated with ownership and operation of these projects is critical to your success.

 

CEI’s experienced project development team and advanced software products are ready to help you understand and address these challenges.

 

 

 The Elements of a Profitable Own and Operate Business?

 

Those who have achieved success as owner / operators did not do so as the result of chance.  Success was achieved as the result of a thorough and methodically executed business plan that envisions: 

 

  • The short term objectives of closing deals and operating assets with positive cash flow, and  

  • The long term objectives of assembling an integrated portfolio of smoothly operating assets that not only deliver operating income but that can be valued and recapitalized by the financial community.  

 

These principles are the fundamental basis of the business and project development, contracting, financing and asset management approach that CEI can help you to achieve.  Most in the industry seem to have fairly recognized the importance of good engineering, sound technology and well performed maintenance as important elements of a successful Ownership and Operation Business, but unfortunately for many this is where it stops. Widely misapplied and misunderstood in the industry today are the importance of: 

 

  • Thorough, consistent and standardized financial analysis tools,

  • Integrated business and contract development tools,

  • Innovative financing techniques and approaches for effective utilization of tax benefits, 

  • The formation of a consistent set of documentation that will allow the investment community to assign a premium value to a portfolio of individual assets.

     

WindA portfolio of assets, if properly architected from the start, can realize this value. CEI can provide you with the financial analysis tools, documents, training and techniques to successfully deliver on this broader and more profitable vision. 

 Offering
 
CEI has offers a phased, systematic and comprehensive approach that will facilitate both profit and growth in the exciting own and operate marketplace. Through demonstrated and repeated success for our clients, we offer an integrated suite of customizable software tools and services that allow you to screen, value, negotiate, finance, close, manage and recapitalize energy project investments, maximizing the value and managing the risks.
 
Included in this software and services offering are: 
 
  • World Class and fully customizable financial analysis software that allows you to evaluate the economics of energy projects from your own viewpoint as well as from the viewpoint of every party that you are negotiating with.  
  • Terms Sheets / Heads of Agreement that provide the basis for an integrated business development and contracting approach for financing, power purchase agreements, thermal supply agreements, maintenance agreements, and other key contracts.
  • Support for obtaining and optimizing financing.

     

 

 

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  • Implementation of an asset management strategy that will allow you to optimize, manage risks and capitalize the inherent value energy projects that can be capitalized and then recapitalized to grow your business and optimize your profitability.