The technology is proven, the cost is reasonable, the return on investment (ROI) is good. We have a great project, right? Maybe not.
It is amazing how many different things can stand in the way of success. I gave one example in an earlier column (May 2020’s “Double Up on Cogeneration”), where an equipment upgrade I proposed failed to provide the expected energy savings because the plant operators didn’t know how to run it. Lack of adequate workforce training is a fairly common challenge in industry. The examples below, drawn from projects in various parts of the world, illustrate several other barriers that can hinder the implementation of promising projects.
Permits. The legal authorizations to operate equipment are usually intended to ensure safety and protect the environment, but sometimes they have counterintuitive consequences. For example, a colleague identified a simple modification that would significantly improve the efficiency of a large fired heater, and reduce emissions. The initial economic screening looked very promising, but site management immediately vetoed the idea because code requirements had changed after the fired heater was installed. The equipment, now grandfathered, could continue to operate; however, if any modifications were made, the grandfathering would no longer apply, and the fired heater would have to be brought up to the current code requirements — a prohibitively expensive upgrade.
Regulations outside the plant boundary. Many companies are now developing renewable energy sources (e.g., solar energy farms and wind turbines) to displace electricity produced from fossil fuels. These facilities require a great deal of space and, depending on land availability, they often have to be placed a considerable distance from the plant they serve.
A multinational company conducted a feasibility study for a solar energy farm, and set an aggressive schedule to implement the project. A critical requirement was the use of existing grid to link the new power source to the existing production plant. However, local grid regulations did not allow wheeling (i.e., transmission of third-party power through the grid). As a result, negotiations between the company and the grid regulator to enact changes that would allow the project to proceed delayed the initial schedule by many months.
Boundary definitions. A prefeasibility study several years ago for a cogeneration project at a large chemical complex — to replace several boilers while at the same time reducing electricity imports by about 80% — was positive. While many technical challenges existed, the initial assessment indicated these could be overcome at a reasonable cost; the project’s ROI easily satisfied the company’s requirement.
The engineering team endorsed the project. The sustainability team did not because the cogeneration project increased the amount of energy the complex imported. Their accounting system was based on energy flows across the plant boundary. It treated a Btu of fuel as equivalent to a Btu of electricity. Using that method, their conclusion was correct. However, their methodology ignored that the power plants produced the imported electricity using fossil fuels at an efficiency of less than 40%. If you extended the boundary to include fuel used by the power plants, it was clear that the cogeneration project would greatly reduce the overall amount of fuel fired to supply the combined heat and power requirements of the complex. However, the company’s sustainability report was based on the sustainability team’s methodology; there was great reluctance either to change their reporting system or to approve a major project that would adversely affect their sustainability metrics.
Supply chain. The same company had another problem. The cogeneration facility required natural gas — much more than was available from the existing supplier. The lack of an alternative supplier in the area posed an additional major obstacle. The combination of these two barriers stalled the project; it did not proceed beyond the prefeasibility study.
Many other factors can present hurdles to project implementation. If you have any examples you’d like to share, please let me know.
