Oil and diesel generation shares the main drawback as exhibited by coal and lignite technologies (higher carbon and particulate emissions and lower net plant efficiencies), relative to gas, nuclear, hydroelectrical and geothermal generation technologies.  However, an additional disadvantage of oil and gas generation is the potentially higher cost of oil and diesel as feedstocks relative to coal or lignite.  However, oil and gas does have the advantage over coal and lignite, in that it this fuel is more readily transportable, globally by maritime tanker, rail, truck and pipeline (whereas the energy density to weight of many types of coal and lignite, often renders it uneconomical to transport over long distances).  

Oils (heavy and light fuel oils) consumed for power generation are typically lower-spectrum distillates in the oil refining process, and diesel is in the mid-range are progressively more expensive.  The affordability of these distillates varies by market.  Oil producing regions, such as the Middle East with sufficient locally refinery infrastructure (and fewer coal and lignite resources) have historically depended more heavily on oil and diesel generation as the cost of these fuel stocks was viewed as competitive in many cases.  However, even in oil-rich regions, use of oil and diesel resources for power generation should be considered in terms of the opportunity cost exporting crude oil or domestic use of oil distillates for domestic and regional industry and transport or for export of refined products.

Given the comparatively high carbon and particulate emissions, potentially lower efficiency and costs of oil and diesel fired generation units, this generation technology has fallen out of favor (similar to coal and lignite generation).  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 those use of those gas, nuclear and/or hydro and geothermal resources is geopolitically and environmentally acceptable), there usually no justification to develop oil and diesel generation.  However, in some circumstances there may be insufficient 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 or geothermal 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 oil and diesel generation units, utilizing the combined cycle turbine combusting designs, in larger unit sizes, 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.

Despite the known disadvantages of the oil and diesel 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 oil/diesel generation to replace an ageing ageing, polluting and inefficient fossil fuel plants and/or expand generation capacity.  Under these circumstances, choosing to develop oil and diesel generation can be considered a sensible and responsible public policy decision.

Oil and diesel generation technology can be and often is applied to co-generation (electricity and heat/cooling) and water (desalination) and power plants.  Similarly, oil and diesel 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 oil and diesel 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 oil and diesel 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 oil and diesel 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 oil and diesel 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
  

WHAT WE DO

SECTORS covered

energy & utilities: generation facilities

oil and diesel generation FOCUS