Project screening (see the figure below) is an essential part of the project development process; it is here that projects come to die a merciful death and unworthy projects are efficiently and effectively “killed off” before they waste valuable resources on projects that have little chance of success. How is it done?
Project Screening relies upon three distinct phases:
- Initial Screening
- Feasibility Study
- Detailed Design
During initial screening IEA uses technical and financial models from its array of past projects to determine if the high level energy conversions, equipment costs, fuel and O&M expenses offer economic payback. This is often done with a fairly quick analysis of the past 12 months of customer utility bills and application of a number of rule of thumb means to simplify the calculations and data required; usually taking no more than a day or two to complete. Less than 25% of proposed projects survive this initial screen. Prices for an initial screening analysis are typically very modest.
In the next phase, projects will go through a formal feasibility study, where they are scrutinized in much more detail. Here specific equipment selections are contemplated and pricing obtained, preliminary construction estimates are secured, fuel type, pricing and delivery is evaluated, considerations for cooling water, water treatment, electrical interconnect, etc. are taken into account, a simplified environmental effluent model (combined with the existing installation emissions) is run, heat and energy balances are calculated and a detailed financial pro forma prepared. Only about 10% projects survive this phase.
During the final phase a detailed design study is commissioned and the actual facility design is undertaken typically resulting in:
- Architectural, electrical, mechanical and instrument and control system drawings, sufficient to support construction estimates.
- Engineering specifications for major components, sufficient to support procurement.
- Preliminary construction estimates obtained.
- Final capital expenditure estimates obtained.
- Emission modeling and analysis complete sufficient to support preparation of the emission permit application.
- If needed, a purchase power agreement (PPA) negotiated with local utility for excess power generation.
- Fuel supply agreements negotiated.
- Final project pro forma financial analysis detailing financing assumptions and expected financial returns, sufficient to support external financing.
Only 1-5% of projects survive the detailed design phase and receive final approval to proceed.
Contact IEA and our experts can help you through the project screening process.