Strategic development of production utilities
Naturally, power production and supply utilities want to utilize the capacity of the existing plants in the best possible way. At the same time, the future production and supply capacity must be planned. Therefore, plant owners need answers to the following questions:
- Which technological solutions are relevant when at the same time we wish to make the best use of the existing plant capacity?
- How does the consumption of district heating affect our business?
- How does the development in power markets affect future investments?
- How do we ensure that future investments are commercially robust to changes to framework conditions such as taxes and subsidies?
- How do we ensure efficient, combined operation of existing plants and new plants?
Based on our specialist knowledge on energy plants, Added Values help you find the right solutions.
The benefits of strategic analysis
A sound project plan of the future plant development is of immense value. This plan ensures that future investment decisions are strong and feasible, as well as ready for future external and internal changes.
As an example, the increased commercial value of expanding the accumulator tank capacity may be significant. And in addition to other minor investments in increased production flexibility and production capacity, the actual business values could grow remarkably.
A strategic analysis provides
- a specific investment plan. The plan may be short-term oriented, i.e. 3-5 years, or long-term oriented, i.e. 10.20 years. The plan is a solid base for decision-making and communication.
- financial quantification of how plant development will be affected by changes in surroundings. Not only does this quantification ensure a commercially sound business, it also makes it possible to react to changes efficiently.
- detailed outline of how the operation of each plant and the co-operation between plants will most likely look in future. Not only does this outline ensure that the technical solutions can be realized it also forms the basis of future tender specifications.
- specific measures of improvement which can be implemented right now. These measures may be software tools supporting daily operating, new fuel purchase strategies, or the strengthening of internal competencies.
How Added Values performs a strategic analysis
We take on the role as project manager in the process.
The steps are usually as follows:
- Detailed list of present conditions i.e. existing plant(s), operation, plans and strategy.
- Development of simulation model based on Added Values’ AVPlan analysis tool
- Execution of simulations and analyses based on the customer’s strategic and commercial requirements.
- Conclusion, recommendations, and analyses documentation.
The customer is a power utility that owns waste-fired heat and power plants, district heating distribution grid and peak load plants. As part of the strategic analysis, we analyzed whether it is commercially sound to integrate accumulator tanks in their grid.
In terms of investments, the solution demands that a new accumulator tank is built, and that a by-pass steam pipe is replaced on one of the waste-fired plants. The replacement is the result of AVPlan and plant knowledge.
In terms of operation, based on 2015 market and plant conditions an annual increase of the contribution margin of DKK 2 million can be achieved.
The increased earnings come primarily from reduced losses in the power market and from the displacement of more expensive district heating production of peak load boilers. The increased earnings are particularly robust towards fluctuating power prices for instance.
In addition, it was part of the analysis to identify the optimal tank size and the best tank location.
The next steps: Added Values has completed the analysis in cooperation with the customer, who subsequently wished to be able to carry out this type of analysis themselves. For this purpose, Added Values has provided a customized version of AVPlan to the customer.