energy & utilities: generation facilities

coal and lignite generation FOCUS

Given the comparatively high carbon and particulate emissions, potentially lower efficiency, higher costs of coal and lignite fired generation units and costs of landfilling and safekeeping massive quantities of ash, this generation technology has fallen out of favor.  Particularly in those energy markets that are served by access to affordable natural gas supplies or have sufficient access to sufficient nuclear and hydrological energy resources (and the use of those gas, nuclear and/or hydro resources is geopolitically and environmentally acceptable), there usually no justification to develop coal and lignite generation.  However, in some circumstances there may be access to locally or regionally-suppled coal or lignite resources, and there may be no access to gas infrastructure (gas pipelines/grids or LNG/CNG), insufficient exploitable hydroelectric resources and nuclear power may be out of reach.  Of course, all of these circumstances may arise either because of practical limitations or because of internal political or external/regional geopolitical and policy and environmental reasons.  

Modern coal and lignite generation units, utilizing the latest supercritical and ultra-supercritical boiler designs and materials, when deployed larger size units, can achieve efficiencies that rival the lower end of modern gas technologies.  Similarly, most particulate stack emissions can be suppressed to acceptable levels using modern scrubber and precipitation unit technologies.  Applying these technologies (some of the latest technologies being unproven "first of a kind"), while technically feasible, can add significantly to the capital costs, which at some point can render their use beyond the affordability limits of the market.

Another issue specific to coal and lignite is with respect to the environmental issues related to extraction of coal/lignite (particularly in the case of open pit mining) and with respect to disposal of ash.  Coal and lignite ash contains concentrations of heavy metals and other hazardous materials, whereby such ash needs to be safely landfilled and stored using an impervious barrier to prevent any groundwater leaching.  Landfilling costs (which are often teh responsibility of the generator company) can also drive up capital costs.

In addition to the unfavorable emissions characteristics of coal and lignite generation technology has relative to gas, nuclear and renewables, coal and lignite technologies exhibit other unfavorable characteristics relative to gas and nuclear.  One of these negative characteristics is that these generation units cannot be efficiently ramped-up and ramped-down rendering coal and lignite as an adequate "base load" technology, but is not well-suited for "load following" or "peaking" operations.  As higher percentages of intermittent renewables (such as wind and solar) generation is and will come on-line in many markets, the inflexibility of coal and lignite generators to respond to the intermittencies of renewables can cause significant problems for the grid operator.  Another disadvantage of coal and lignite relative to gas generation units (and potentially also relative to nuclear SMR/AMR generation units), is that these generation units (in particular the boiler designs) are cannot be standardized as each unit needs to be customized, to varying degrees to accommodate the specific fuel feedstock qualities that will be used. On the other hand, gas generation units can be procured as standardized "off-the-shelf" technologies which contribute to reduced manufacturing and assembly costs and faster power plant construction and installation time frames (which contributes to comparatively higher unit capital costs for coal and lignite technologies).  Lastly, due to environmental policies of many international and development finance institutions, (IFI/DFIs), export credit agencies and export-import banks (ECAS/EX-IMs), commercial lenders and investors, which has specifically restricted or prohibited participation in coal and lignite projects, it may be much more difficult in many cases to find international third-party financing for coal and lignite projects.

Despite the known disadvantages of coal and lignite generation, given the specific circumstances that may exist as outlined above, the policy decision may still be taken that most prudent generation option available is to deploy modern, highest-possible-efficiency and lowest-possible-emissions coal or lignite generation (e.g. super/ultra-supercritical boiler technologies) to replace an ageing ageing, polluting and inefficient fossil fuel plants and/or expand generation capacity.  Under these circumstances, choosing to develop coal and lignite generation can be considered a sensible and responsible public policy decision.

Coal and lignite generation technology can be and often is also applied to co-generation (electricity and heat/cooling) and water (desalination) and power plants.  Similarly, coal and lignite fired plants can be co-fired with biomass (including sewage sludge, solid waste and agricultural biproducts).  In each case, co-generation and/or co-firing can increase net plant efficiency, reduce carbon emissions and reduce fossil fuel unit consumption in comparison to stand-alone plants.  DCS advisors have a great deal of expertise with respect to co-generation, water and power production plant and biomass co-firing (including specific expertise in water/wastewater, district heating/cooling, and solid waste utilities and enterprises).

Our advisory services can help our clients align the capabilities of the counterparty's capital and "know-how", efficiencies, life-cycle operational and maintenance discipline (including plant decommissioning), and management resources with the public sector objectives of most efficiently providing and ensuring safe, reliable, and efficient electricity (and heat/cooling or desalinated water) generation to citizens and business users at affordable prices (energy tariffs, fees and taxes).  We can also assist our clients in identifying and procuring suitable vendors, technology and service providers in the coal and lignite generation sector.   Our experts have significant experience and competence in delivering generation assets under various development, financing, operating and ownership models, including Engineering Procurement and Construction (EPC), Engineering Procurement and Construction Management (EPCM), Operations & Maintenance (O&M), Design-Build-Own-Operate (DBOO), Design-Build-Own-Operate-Transfer (DBOOT), and similar variations.  We also have significant experience advising on Public-Private Partnership (P3), privatization and M&A transactions within the energy and utilities sector.  Our broad and global experience includes all forms of P3 models, under regulated or deregulated tariff regimes, offtake agreements (such as various forms of PPAs and CfDs and similar contractual agreements), availability payment, as well as stock/share, trade and asset sales/acquisitions and Initial Public Offerings (IPOs) with respect to energy and utilities companies and assets.

Within the coal and lignite generation subsector, DCS experts maintain relationships with related project consultants and participants including: both international and local legal advisors; technical, engineering and environmental/social advisors, economic/market consultants; contractors, vendors and technology providers; strategic and financial equity sponsors; lenders (including commercial lenders, international/development financial institutions (IFIs/DFIs), Export Credit Agencies and Export-Import Banks (ECA/Ex-IMs), institutional lenders, bond funds and investment banks) and credit rating agencies (if necessary).  We are always prepared and highly experienced in taking on a lead transaction advisory or project/program management role where we coordinate and manage (in some cases, procure and retain via subcontract) various technical, legal and other consultants required for the project.  On behalf of our clients we are prepared and accustomed to leading and concluding negotiations with governmental/public sector or equity sponsors, contractors and venders, lenders, rating agencies and regulators, on behalf of our clients, as may be relevant for a given client project.

In many client cases, there may also be a significant nexus between generation projects, assets and businesses and other sectors that we specialize in, such as water and wastewater (in the case of water desalination and power plants or biomass/sewage sludge energy recovery plants); solid waste (in the case of biomass/solid waste "waste-to-energy" plants); energy transmission, distribution, sales and supply and trading (electricity, heat and/or cooling grid evacuation); and, industrials (E&C, heavy industries). We are prepared to bring our complementary expertise in these other relevant sectors to our generation sector clients, as their specific client project may benefit.   

Please click on the below links to learn more about the specific services related to the coal and lignite generation subsector that DCS experts can offer:​

• ​Transaction Advisory
• Project/Program Management
• Strategic Planning
• Feasibility Studies
• Debt and Equity Capital Raising
• Contract Negotiation
• Financial Modeling, Review and Audit
• Business and Asset Valuation​
• Tender Management: RFEI/RFQ/RFP
• Mergers & Acquisitions Advisory
• Workouts and Restructuring​
• Corporate Governance
• Training and Capacity Development

DCS focuses on providing the above services in the coal and lignite generation subsector to the following categories of clients:

• Developers/Sponsors/Concessionaires
• Investors
• Corporations
• Governments/Governmental Entities
• Contractors/Vendors
• Utilities
• Lenders
• Regulators​
• Investment Banks
• International Agencies
• International Finance Institutions
  

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