PROJECTS / HFO Conversions and/or Replacement Financial Analysis

HFO Conversions and/or Replacement Financial Analysis

June 8, 2023

A private company had been considering the conversion and/or replacement of some of its existing diesel or coal-fired generation units, exploring the option of switching to Heavy Fuel Oil (HFO). To assist with this evaluation, the company engaged K&M to develop a proposal for conducting a return-on-investment analysis for different scenarios related to HFO conversion or replacement.

The proposal encompassed the following components:

  1. Conversion and newbuild technical analysis: This involved assessing the viability of converting existing units to HFO, considering factors such as technical feasibility, equipment compatibility, and potential modifications. Additionally, K&M conducted an analysis of newbuild HFO technology options, including the associated balance of plant (BoP) requirements and cost analysis.
  2. Scenario analysis: K&M performed a comprehensive scenario analysis, examining various conversion and replacement options to determine their economic viability. This analysis considered factors such as capital costs, operational efficiency, fuel availability, and environmental impacts.
  3. Implementation roadmap: K&M developed an implementation roadmap outlining the steps and timeline required for the execution of the selected HFO conversion or replacement strategy. This roadmap provided a structured approach to guide HSA in the successful implementation of the chosen scenario.

By conducting the return-on-investment analysis and providing a comprehensive proposal, K&M supported the private company in making informed decisions regarding the conversion or replacement of their existing diesel or coal-fired generation units with HFO. The analysis considered technical aspects and scenario evaluation and provided a roadmap for the implementation of the chosen strategy.

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