Bas Van Berkel and Ryan Little have recently completed their MBAs and are planning to start their own business. They are interested in entering renewable energy sector. There are various choices and opportunities available in this sector, and both of them are faced with a decision of selecting the technology with most potential and minimal risk.
What are the alternatives and recommendations (reasoning on why you chose the recommendation)?
Hydroelectric Power – cost ($4000 - $7000) per kW
Biogas – cost ($4000-$7000) per kW
Wind Energy – cost ($2000 - $2750) per kW
Geothermal Power – cost ($3800 - $5800) per KW
Based on the capacity factor, the cost per kW, and possible acceptability and productivity in the Ontario environment above mentioned four options are the most feasible ones as compared to all alternate renewable energy sources mentioned in the case study. Solar Photovoltaic, increasingly popular option is not feasible because of its 12 -15 percent capacity factor because of the local weather.
What are the possible courses of action for the decision maker? Endeavor to identify and rank alternative actions.
First of all, the decision maker has to identify the capacity factor of each of the alternative energy source because weather and seasons of Ontario will have a significant effect on the productivity levels. Second factor to consider would be the cost of construction of the facility or the equipment as financing large commercial facilities could be an issue. Third, time required to develop the facility should also be considered. Last, downsides of each energy source should be evaluated closely so as to avoid negative consequences.
What are the likely short and long-term consequences of the policies that you have identified?
- Wind Energy
- Geothermal Power
- Hydroelectric Power
Biogas is a feasible long term alternative for renewable energy source. Its capacity factor is as high as 80 to 100 percent if it is properly maintained. The production facilities also work independently of the weather and seasonal conditions unlike wind or solar energy sources. In addition to this, Biogas can also be used as a substitute for natural gas and thermal heat making it an attractive option.
Make a recommendation. Your recommendation should be realistic, actionable, and supported by analysis (including numerical where appropriate). Finally, your recommendation should consider implementation: how should the entrepreneur carry out your suggestions, when they should do it, and how. You should address downsides of the recommendation.
The best option for two partners would be to move forward with Biogas energy source. Though, development of its facilities is bit complicated as compared to wind or hydropower because of sourcing of organic by-products, but it is the most feasible option, in the long term. Its facilities can operate twenty four hours and seven days a week providing base load power generation i.e. enough to meet the region’s minimum demand. In addition, there would be absolutely no impact of weather or season on the productivity resulting in capacity factor up to 80 – 100 percent.
First of all, entrepreneurs should educate nearby communities and take all stakeholders into confidence regarding Biogas energy source as very little is known to the general public about it. Secondly, because of the possibility of odor, entrepreneur should select a location where there is a minimum impact on local people. Last, considering strides made by Europe in Biogas plants, entrepreneurs should start as early as possible so that long term energy needs of Ontario can be fulfilled.
Large-scale production could cause odor in areas where plants are located resulting in poor living conditions for nearby communities.