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Homework answers / question archive / Combined Heat and Power Generation Initiative Company profile International Paper is an American company specializing in making all types of sustainable paper products, from multi-purpose papers for use in double-sized documents to premium papers for full-color presentations and paper packaging products
Combined Heat and Power Generation Initiative
Company profile
International Paper is an American company specializing in making all types of sustainable paper products, from multi-purpose papers for use in double-sized documents to premium papers for full-color presentations and paper packaging products. The company seeks to expand to the American market and launch a new firm in Austin, Texas.
Background information
Combined heat and power (CHP) initiative is an efficient and sustainable power generation method that allows firms to generate on-site electric power and thermal energy from one fuel source (Cavallaro, 2016). Most firms use the conventional power generation strategy, which does not utilize the heat generated as a by-product. Combined heat and power technology uses this waste heat to perform various industrial processes such as heating water or spaces.
Business objective
The company seeks to adopt efficient and cost-effective technologies to compete with multinational corporates in the modern ultra-competitive manufacturing marketplace. This technology allows the company to cut production costs by minimizing the resources used for thermal heating.
Benefits and limitations of adopting the combined heat and power generation technology Benefits
It will allow the company to enhance productivity while reducing production costs (Maghanki, 2013). The initiative will enable the company to supply a significant part of its electrical power needs with cheap reliable power, which will significantly reduce the company's energy bill, leading to a positive return on investment for its shareholders and investors. Low production costs will ultimately enhance the company's competitiveness.
It will reduce emissions and protect the environment.
Reduced reliance on the grid- The initiative would allow the plant to avoid unscheduled shutdowns by disconnecting from the power grid and generating the necessary electrical power during power outages.
Limitations of the CHP initiative
Although the initiative will allow the company to save money on low energy bills, the systems required are quite expensive. Acquiring and installing machines and software will require substantial capital (Olabi, 2020).
The system will only be eco-friendly if it runs on renewable energies such as biogas as the primary fuel. Using fossil fuels such as diesel as the fuel source will generate emissions that will outweigh the environmental benefits of the combined heat and power initiative.
Option identification and selection Cost-Benefit Analysis.
Scope- The company has the resources required and competent personnel to acquire and operate the combined heat and power system.
Cost- Installing the system will have direct, indirect and intangible costs to the company; direct costs to acquire the materials and software needed for the system, indirect costs such as rent and utilities and intangible costs in the form of the changes' impact on its employees.
Benefits- The initiative will allow the company to reduce production costs by lowering energy bills. The combined heat and power generation technology will give the company a competitive advantage by leveraging itself as a responsible and sustainable business and thus appeal to the modern eco-friendly consumer.
Market assessment Political
The Federal government has established the Better Buildings initiative under the Department of Energy to encourage and help American firms and homes install better energy-efficient technologies such as combined heat and power systems (Better Buildings, 2021). This initiative is part of the government's efforts to increase the competitiveness of American companies. Thus, the company's strategy of adopting the combined heat and power generation technology aligns with the federal government's plans.
Economic
The initiative will provide the company with several economic benefits, such as reduced electricity costs, maintenance costs, and the capability to sell/export power to other vendors
Sociological
The recent adverse weather conditions in various parts of the world have increased people's awareness of climate change (Howe, 2019). The initiative will demonstrate the company's efforts towards environmental conservation and fighting climate change which will appeal to consumers who want to see corporates acting to save the planet.
Technological
The world is slowly transitioning from non-renewable to clean, renewable energy sources to reduce carbon emissions and combat global warming. This includes shutting down non-renewable energy sources such as coal and building new clean energy sources such as solar farms. This process has been hindered by the unreliability of clean energy sources and increased the urgency to enhance the efficiency of energy sources and hasten the transition. This initiative focuses on improving the efficiency and productivity of energy sources and thus will reap huge benefits from technological advances in energy efficiency.
Legal
The new initiative will include electric power generation. The generation, transmission, and distribution of electricity between states in the United States are regulated by the Federal Energy Regulatory Commission. State governments regulate the distribution of retail electric power through their utility companies or commissions. Thus, the company's actions should adhere to guidelines set by these regulators.
Environmental
The impact of global warming has increased the need to conserve the environment. The combined heat and power initiative focuses on harnessing waste heat by-products that reduce environmental emissions.
Risk Assessment
The combined heat and power initiative will substantially save the company's energy costs. In addition, the prospect of selling/exporting excess power promises a rapid return on the investment. These advantages can be increased further by using low-cost energy sources such as methane produced as a by-product of wastewater treatment plants. However, the initiative also has some potential risks that stakeholders should evaluate before implementation. They include,
reliability and price of the needed fuel
Operating uncertainties, such as the availability of maintenance
Regulatory uncertainties such as environmental, noise, sale of excess power, etc
Availability of technological upgrades
Cost and performance of the installed system
Inflation
Credit for financing and framework for debt repayment.
The company will manage these risks by collaborating with different firms through contracts.
