Supporting IPPs over long term contracts
IPPs generate power under contract for their customers, typically utilities or industrial companies with a requirement for local power generation.
IPP contracts tend to be complex and long term – often spanning 20 years or more. Typically at the start of a contract, the IPP has ownership of assets, but this can be transferred in time to the customer. The build, own, operate, transfer (BOOT) model is often employed by IPPs and their customers.
The benefit of ETC technology for IPPs
IPPs bidding higher efficiency plants win more contracts. Where contractual fuel efficiency targets can carry heavy penalties, or when the IPPs themselves carry the cost of fuel, running a highly efficient plant has a significant impact on profitability
Higher bid conversion rate: In a competitive environment, IPPs need to differentiate their offering, right from the start of the process. In a non-standardised market, bidding for a power plant contract with a higher efficiency fleet has been proven by our IPP customers to be a key factor in their success. With ETC, IPPs offer customers a better, more technologically advanced power plant, and achieve rapid payback on their investment.
Meet or beat contractual efficiency targets: Depending on contract, an IPP will either carry the cost of fuel for part, or all of the contract term, or will be incentivised by their customer to minimise fuel costs. This can take the form of contractual efficiency targets which carry significant penalties for non-compliance. An IPP operating engines with ETC technology integrated as standard has clear advantages:
- Where the IPP’s customer pays for fuel, ETC technology offers an immediate saving to the end customer through reduced fuel bills
- Improved energy efficiency increases the likelihood of achieving and even exceeding contractual fuel targets, avoiding costly penalties and potentially enjoying gain share
Increased profitability: The ETC technology is proven in the field and highly reliable, and is suited to retrofit as well as new-build applications, which means that IPPs can use ETC technology at any stage of a contract to give an immediate boost in profitability:
- If a contract includes the IPP carrying fuel cost, the ability to generate the same power output with less fuel intake delivers increased profit for the duration of the contract
- Some contracts specify a shared fuel savings model. IPPs using ETC technology can offer better savings and more profit to their customers, whilst also increasing their own profitability
Design integration and after sales support: Bowman’s engineering design team has the skills, expertise and experience to support the integration of ETC technology into IPP projects:
- The system is simple to integrate with a genset, is maintained at the same intervals as the host engine, and does not require specialist engineering skills to maintain
- After sales support is provided for the life of a project, and our customer support engineering team can travel to support projects almost anywhere in the world
Rapid payback and increased profitability (example)