Dec. 2011/Jan. 2012 / Features
Weighing Pros and Cons of Power Co-Generation
New technologies combined with government incentives have created new opportunities for energy users to seek out diverse sources of supply and potentially reap significant economic benefits for doing so. Issues of cost and risk are primary. The team studying the project should include experts in a variety of areas, including technology, markets, and legal issues. Each of these can have a major impact on project risk as well as securing financing.
Ascertain what the allowances are in your state for “net metering” (selling power back to the grid), and whether there are other policies that might give the system certain competitive advantages.
Some projects and incentives will require special fuels that could increase the company’s ongoing expenses. If the system needs bio-gas rather than standard gasoline, for example, this factor must be weighed along with whatever government incentive there might be.
The team also should look closely at liability and insurance issues. The major investments themselves must be insured, but that may affect other areas of the plant’s insurance footprint, as well. Installation, maintenance and operational risks all must be carefully considered. If equipment is being installed, when does title and risk transfer? Confirm that the entire system works properly prior to accepting delivery.
According to the American Public Power Association, renewable sources make up about 36.1 percent of the fuel mix for plants coming online in 2011. That number is certain to increase in years to come.
