The Challenge
Entering this space, which was new to the organization, presented many challenges, not the least of which was that there were many alternative methods in the market for converting coal to clean energy. In addition, although typical in competitive business, the reaction from the existing market players to a new entrant was uncertain. Furthermore, market drivers were unclear, and the resources that the organization had available to them were largely part-time and were geographically dispersed across the globe. This brought additional challenges to the planning, coordination, and communications processes.
Technology and Legislation
Another key uncertainty was in the fact that environmental legislation was continually evolving and there was no clear indication as to which direction it would take. This had an impact on the technology because uncertainty existed as to where innovation would lead.
The Solution
Once the team had completed the framing process to clarify objectives, identify strategic options, and agree on the best alternatives for the objectives, they used a third-party consultant to assess the potential values of first-, second-, and third-generation plants. Included in this was forecast technology improvement for both coal to power, and coal to power with poly-gen. The studies revealed that if the client was to realize expected returns in a third-generation plant, then the returns for the first- and second-generation plants would be significantly lower than the acceptable hurdle rate.
Process Insights
During the process of assessing alternatives, options that at first seemed to be intuitively better instead proved to have limited economic benefits. Throughout the process, the ability to decrease costs and increase performance through technology innovation rose in importance.
Team Conclusions
Based on all the findings, the working team came up with the ideal solution. First, it included developing a technologically advanced plant that gave them the performance of a third-generation plant. Next, they developed a strategy for implementing a commercially successful first-generation plant. Lastly, they used resources available from a standard plant to leverage their resources and knowledge to arrive at the optimum solution and technology.
