The world’s energy consumption is at an all-time high, and thanks to Independent Power Producers (IPPs), more remote and isolated communities are able to access power than ever before. In addition, many heavy industries have achieved independence from mainstream energy providers.
As economies, industries and political landscapes change, fuel costs become more difficult to predict. Maintaining profitability and competitive pricing becomes more difficult, too. This is the challenge that IPPs face in the 21st century, and one area where Bowman can help.
Establishing Costs and Margins
Power production relies entirely on fuel resources – in more ways than one. Diesel and gas are profoundly reliable, controlled and a reasonably safe means of generating power, but the volatility of markets over the course of the last two decades has given IPPs, mainstream energy providers and end consumers a turbulent ride.
The single greatest cost to energy production is fuel itself. Rigorous streamlining of operations and network maintenance efficiencies can make an impact to the bottom line, but comparatively, savings in these areas are statistically insignificant against outgoing fuel costs.
Because fuel markets are unpredictable, there’s no solution to mitigating unexpected rises in cost other than to pass it on to consumers. While fluctuating fuel prices impact the market as a whole, there will inevitably be winners and losers. Winners will be able to sell power at competitive prices without eating into profit margins – losers will be unprepared for price hikes, and lose any competitive edge they once held.
Reducing the burden placed on IPPs by fuel costs starts relatively simply – and alleviating wastage is a key step to establishing a sustainable model of profitability.
Methods of Waste Reduction
A 2016 survey of IPPs found that 90% of independent producers claim that power generated is not always equal to power sold.
This inefficiency must be tackled first before pursuing further cost-saving measures – by ensuring that direct demand is met comfortably, while having processes in place for export, storage and resale of surplus.
This inefficiency directly eats into fuel budget. Unsold surplus is a significant waste factor, given that energy storage solutions – no matter how efficient – always cost some portion of power to utilise.
Power storage systems are, for the most part, still relatively crude. Battery technology has developed leaps and bounds in recent years, but the high prices and need for additional infrastructure means that cheaper alternatives are usually preferred – like compressed air storage or pumped water damming methods.
These methods of storage can be reasonably efficient at their best, but because they rely entirely on geology or existing infrastructure, they aren’t accessible or practical solutions for IPPs in remote locations.
While storage of surplus, resale and export are healthy and sensible ways of reducing waste, they are again largely market dependent, and with that, they hold a degree of uncertainty.
Stakeholders do not appreciate uncertainty. Continued investment and backing can only be achieved with profit.
The most direct and reliable method of waste reduction, with the highest degree of certainty, is to convert waste to energy. ETC (Electric Turbo Compounding) offers a reliable solution for reducing fuel consumption by up to 7%, while increasing output by up to 10%.
Up to 60% of fuel energy is lost to cooling and exhaust gasses. Converting waste to energy with ETC requires retrofitting a genset with a highly efficient turbocharger and turbo generator at the exhaust stage of the engine. The turbo generator recovers energy from the exhaust gas and feeds a power electronics system, which converts the recovered exhaust power into grid-quality AC power.
Bowman’s ETC technology is used globally – employed by OEMs and IPPs – to deliver a unique set of advantages; better yields, lower costs and greater profit.
While adopting ETC is just one of many possible efficiencies IPPs can add to their offering, it represents an immediate and direct control of resources that can serve as the basis of sustained profitability in an uncertain marketplace.
Reducing Waste as the Basis of Profitability
Independent power production, as an industry, has served growing economies and established economic powers alike, but its future, as with all business, depends on it maintaining profitability.
It’s safe to assume that most IPPs operate reasonably efficiently, with capacity for growth – but reducing waste offers a significant opportunity for cost saving that doesn’t impinge on future success or employee security – one that helps to reduce the uncertainty around fuel prices, fluctuating demand and unreliable resale.
IPPs must look after their bottom line not by cutting corners, but by cutting their most significant cost: fuel. By investing in ETC solutions, IPPs can expect a rapid ROI from significant increases in power production, reduced fuel consumption and lower carbon emissions.