Plant investment analysis
Is your power plant viable? Plant investment analysis drives informed decisions
Market insights
April 5, 2025
5 min read
Identifying potential red flags or weaknesses prior to initiating your power plant project is difficult. But the financial consequences of not detecting potential errors can be incalculable. If you lack the necessary expertise to spot them, then what is your alternative?
In this blog post, we examine some of the most common challenges impacting a power plant project, and we propose a way to ensure you can feel safe making your power plant investment.
Assessing power plant viability is a highly complex decision that demands a deep understanding of technical, financial, and regulatory factors. Obtaining and understanding this information often goes beyond the knowledge and skills that in-house experts can provide. At the same time, blindly trusting the data provided can ultimately result in financial loss, project delays, and more.
Minimize financial surprises through early and accurate project insights
Ensuring power plant viability requires navigating a wide range of challenges that can affect feasibility, profitability, and long-term operational efficiency.
Some of the key concerns include:
- Technical complexity – Power plants involve complex engineering and technological components, including grid integration, unit modeling, and system efficiency optimization. Miscalculations in design or technology choices can lead to suboptimal performance, unexpected costs, and, ultimately, whether a project obtains a grid connection or not.
- Regulatory and compliance risks – Energy regulations and grid requirements vary by country and are subject to change. Failure to align with current and future regulatory frameworks can result in delays, financial penalties, or operational constraints.
- Market and financial uncertainty – Energy markets are influenced by fluctuating demand, evolving policies, and competition from emerging technologies. Incorrect assumptions about revenue streams or operational costs can significantly impact financial viability.
- Grid integration challenges – Ensuring stable and efficient integration with the grid is critical. Issues related to grid studies, transmission capacity, and network stability can affect the plant’s ability to operate as planned.
- Overlooked or miscalculated costs – Unexpected costs related to construction, maintenance, or system upgrades can occur if a thorough assessment is not conducted early in the planning process.
“Over the past years, I have engaged in many power plant projects where initially everything looked fine. But then, way into the project, things started to misalign and not add up according to the plan. The reasons were, for example, inaccurate cost estimations and overly optimistic expectations of the future market, causing misaligned ROI.
I have also often witnessed how the lack of knowledge in identifying weaknesses in infrastructure or technology has resulted in major technical failures further down the line. Having an independent party assess and analyze the details of your project BEFORE you finalize the contract is paramount. It is the safest way to avoid financial surprises later on.”
– Erik Bundgaard Poulsen, Commercial Director of Power Engineering
Plant investment analysis: A strategic and independent solution for informed decision-making
Due to the significant financial and operational risks that surround these types of projects, it is essential that investors base their decisions on unbiased, data-driven insights to accurately assess power plant viability.
Independent consulting by a third party is a structured and unbiased approach to evaluating power plant projects before making a final investment decision (FID).
More specifically, a plant investment analysis can:
- Provide realistic figures based on custom market data
- Identify potential infrastructure and technology weaknesses
- Determine the economic and technical viability of your power plant project
- Help you make well-informed decisions through independent experts, with no vested interest in the success of your project
– Erik Bundgaard Poulsen, Commercial Director of Power Engineering
By engaging independent expertise early in the project lifecycle, investors gain a realistic understanding of the project’s opportunities, get help in identifying potential red flags, and ensure that financial commitments are based on facts like custom market data.
