Due Diligence and Transition Support

We are business managers with a deep understanding of the technical aspects of managing power plants in commercial operation. Many clients have utilized these perspectives to help them evaluate potential investments or strategic decisions regarding proposed or existing facilities.

Click on the links below for summaries of some of our conventional and renewable energy engagements.

Conventional Technologies – Gas, Oil, Coal:

Due Diligence and Development Support for International Client
Acquisition Support & Transition Management for US Power Generating Co.
Due Diligence on a 3,100 MW Seven-Plant Portfolio for a Canadian Client
Acquisition and Transition Management Support for Wisvest

Acquisition Due Diligence and Valuation of a 974 MW Merchant Plant Fleet
Acquisition Support for Sempra Generation’s Purchase of Twin Oaks
Acquisition Support for Sempra Generation’s Purchase of the AEP Portfolio
Due Diligence on a 625 MW Two-Unit Combined Cycle Facility in Arizona

Due Diligence on a 869 MW Combined Cycle Development Project in Ohio
Due Diligence Assessment for a 6,200 MW Power Plant Fleet
Acquisition Due Diligence and Valuation of a 1,168 MW Portfolio
Acquisition Support for a 1,500 MW Coal Plant

Acquisition Due Diligence and Valuation of Two Merchant Plants in Canada
Acquisition Due Diligence and Transition Support for a Combined Cycle Plant
Acquisition Due Diligence and Transition Support for Two Cogeneration Plants
Transition Management for a 158 MW Power Plant in New England

Renewable Technologies – Wind, Solar, Biomass, Hydro, and Geothermal:

Wind Project Screening and Due Diligence for Sempra
Due Diligence for 16 Solar Projects Totaling Over 1,000 MW for Canadian Client
Acquisition and Development Support for 20 MW Canadian Hydro Project
Acquisition Support for Multiple Biomass Power Projects

Development Stage Wind Project Acquisition and Due Diligence Support
Acquisition Due Diligence and Valuation of California Wind Power Project
Greenfield Development and Wind Project Acquisition Support Services
California 220 MW Wind Power Assets Acquisition Assessment

Valuation Assessment of California Wind Power Developer
Wind Project Development Valuation
Wind Project Due Diligence
Asset Acquisition and Transition Support for Kenetech Windpower

Acquisition Due Diligence Review for Costa Rica Wind Project
Large Wind Project Due Diligence
Acquisition Support for Landfill Gas, Geothermal, Hydro and Biomass Portfolio
Coal Power Plant Acquisition and Biomass Conversion

Acquisition Support for Two Run of River Hydro Plants in Canada
Acquisition Support and Project Management for 15 MW Canadian Hydro Project
Acquisition Assessment for 16 Hydro Projects in the U.S.
Acquisition Assessment for 48 Hydro Projects in Canada
Acquisition Assessment for 29 MW Hydro Project in California

.

Conventional Technologies – Gas, Oil, Coal:

Due Diligence and Development Support for International Client
Sterling Energy has supported the acquisition and development of power generation assets for several of Barrick Gold’s large mining projects. We’ve provided advice and performed analyses on a very wide range of business, technical and operational issues.

  • Due diligence – Site inspections, document reviews, economic and plant performance analyses, and strategic advice regarding the successful acquisition of three power plants
  • Economic modeling – Economic and plant performance models for individual plants and multi-plant power supply entities
  • Contract negotiations – Negotiation of plant performance test guidelines and targets, lease performance issues and measures, and general support before and after contract closings
  • Performance tests – Owner’s representative for plant performance and emissions tests.  Development of emissions test specifications and solicitation and selection of testing firm.
  • Power supply options – Economic evaluation of self-build and power purchase agreement scenarios for a large mining project
  • Power supply infrastructure – Advice and analysis regarding consolidated maintenance facilities and other common infrastructure
  • Feasibility study – Site inspection, equipment inspection, business model development, and advice regarding a proposed merchant plant opportunity
  • Reliability modeling – Monte Carlo analyses of plant and power system reliability under a range of mine load and plant reliability scenarios
  • Merit order study – Analyses of the impacts of expected changes in plant configurations, fuel costs, and system capacity on the average and marginal costs of energy in the national electric system
  • Emission control options – Identification and analyses of the technical and economic aspects of a range of emissions control strategies for two different sets of multi-plant power generation facilities
  • Asset management support – Ongoing review and analyses of plant reports and performance data, identification of and recommendations regarding emerging issues, participation in quarterly management meetings, power plant lease compliance assessments, and strategic advice regarding risks and opportunities related to future operations
  • Project financing support – Identification of risks and risk mitigation strategies, presentation to banks’ engineer and prospective lenders, review of documents related to proposed financing

.

Acquisition Support & Transition Management for US Power Generating Co.
US Power Generating Company purchased three East Coast power generating facilities, a total of 2,096 MW representing 23% of the area’s generating capacity.  Because this acquisition was US Power Generating Company’s first, plant operating entities and business processes did not exist.  US Power Generating Company selected Sterling Energy to lead and manage the development of stand-alone O&M business entities and business processes for the three facilities: a 1,280 MW thermal facility and the 816 MW gas turbine facilities.

Sterling Energy provided a four person core team of power plant business and O&M professionals to support the acquisition and to manage the rapid and simultaneous transitions of the three plants to US Power Generating Company ownership.  Sterling’s deliverables fell into three broad categories – acquisition support, business entity and process development, and transition services – as outlined below.

Acquisition Support

  • Fixed asset review
  • Inventory audit management
  • Regulatory and environmental compliance assessment

Business Entity and Process Development

  • Business entity formation
  • Accounting system selection, setup, and training
  • Maintenance and materials management system (MMMS) selection, setup, and training
  • Preventive maintenance and condition-based maintenance task development
  • Management policy development
  • Capital and O&M budget development and training
  • Operating plan development
  • Procurement program development
  • Business process mapping
  • Payroll system development, setup, and training
  • Organization and staffing review
  • Safety and health program review

Transition Services

  • Payroll management services
  • Payroll audit and reconciliation services
  • Benefit management services

The results are best described by this note from the Chairman and CEO:

“You accomplished the incredibly ambitious things you told us you would and put us in a position to close the deal on time and with a great feeling of confidence that critical issues we needed to deal with by closing are under control.  I deeply appreciate what you did and the exceptional spirit, dedication, excellence and grace with which you did it. Ian and I and our entire team are very impressed and we thank you very much.”

.

Due Diligence on a 3,100 MW Seven-Plant Portfolio for a Canadian Client
Sterling conducted due diligence on seven combustion turbine based power generation facilities – a total of 3,159 MW – for a large Canadian institutional investment manager. The portfolio included five operating projects and two projects under construction or development. The projects included simple and combined cycle combustion turbines. Our due diligence scope included technical, operational, environmental and contractual issues. As part of the assessment we reviewed relevant documents, visited facilities in operation or under construction, and prepared a report.

.

Acquisition and Transition Management Support for Wisvest
Sterling Energy assisted Wisvest in the acquisition of two assets on the East Coast.  The assets consisted of a 590 MW three-unit plant and a single-unit 466 MW plant. Sterling provided a five-person core management team of highly skilled power plant business professionals to manage the transition and establish the business for the acquiring entity.  The broad role definitions for the effort included:

  • Overall transition project management
  • Planning and control
  • Physical plant management
  • Business systems
  • Marketing and trading
  • Engineering, environmental and capital project management

Our scope of work included:

  • Development of the mission and vision for the new entity
  • Development of one- and five-year business and marketing plans
  • Development of the business, administrative and accounting programs for the new Wisvest business entity
  • Development of the marketing and trading plan for the entry into the newly formed competitive NEPOOL market
  • Transition the 1,000 person work force to the new entity
  • Development of a capital and major maintenance program
  • Support the non-recourse debt transaction for the new entity
  • Spearhead business strategies for the emerging NEPOOL market

.

Acquisition Due Diligence and Valuation of a 974 MW Merchant Plant Fleet
Sterling Energy performed facility assessments, reviewed documents and developed valuation models for the Black Hills Portfolio, a 974 MW fleet of eight combined and simple cycle merchant plants in the West.

.

Acquisition Support for Sempra Generation’s Purchase of Twin Oaks
Sterling Energy assisted in the bid preparation and due diligence of this 305 MW lignite-fired plant consisting of two ABB-Combustion Engineering circulating fluidized bed (CFB) boilers. After project award, we worked on the transition to integrate Twin Oaks into the Sempra Energy business management system and created a stand-alone business entity.

.

Acquisition Support for Sempra Generation’s Purchase of the AEP Portfolio
Sterling Energy was retained to assist with the acquisition of AEP’s ten power generation facilities in the Southwest. Sterling Energy’s scope encompassed several transition activities including the establishment of the business offices and the integration of the engineering and support groups into the Sempra organization.

.

Due Diligence on a 625 MW Two-Unit Combined Cycle Facility in Arizona
Sterling conducted due diligence on a 625 MW combined cycle facility in Arizona for a large Canadian institutional investment manager. Our due diligence scope included technical, operational, environmental and contractual issues. As part of the assessment we reviewed relevant documents and economic models, visited the facility and prepared a report.

.

Due Diligence on a 869 MW Combined Cycle Development Project in Ohio
Sterling conducted due diligence on a late stage development project in Ohio for a large Canadian institutional investment manager. The project included an 869 MW combined cycle facility. Our due diligence scope included technical, environmental and contractual issues. As part of the assessment we reviewed relevant documents and economic models, visited the project site and prepared a report.

.

Due Diligence Assessment for a 6,200 MW Power Plant Fleet
Sterling Energy performed a due diligence assessment of Duke Energy North America’s ten-plant DENA fleet consisting of six 2×1 CCGT plants and eight steam units totaling approximately 6,200 MW of generation.  The assignment included document reviews, site visits, economic models, and a comprehensive due diligence report.

.

Acquisition Due Diligence and Valuation of a 1,168 MW Portfolio
Sterling Energy performed facility assessments, reviewed documents and developed valuation models for a 1,168 MW generation and transmission asset portfolio. The portfolio included gas and oil-fired combined cycle facilities, a run-of-river hydro facility, and a 440 MW interest in a submarine transmission asset.

.

Acquisition Support for a 1,500 MW Coal Plant
Sterling Energy led the technical due diligence of a large coal-fired plant in the western U.S.  We developed an alternate business model based on gas operations.  We then quantified the market opportunity, met with regulators to assess environmental issues, and developed an economic model to support an offer to acquire the plant.  Our client approved the proposal that we had developed on their behalf and presented the proposal to the owners. This was well-received, so we developed detailed budgets for conversion and restart, modeled proposed PPA terms, met with regulators and other key stakeholders, and developed and submitted an air permit application. We presented the opportunity to several investors; however, the financial crisis of late 2008 derailed the project.

.

Acquisition Due Diligence and Valuation of Two Merchant Plants in Canada
Sterling Energy performed due diligence and developed valuation models for two large combined cycle merchant plants in western Canada – the 300 MW Calgary Energy Centre and the 270 MW Island Generation facility on Vancouver Island.

.

Acquisition Due Diligence and Transition Support for a Combined Cycle Plant
Sterling Energy performed due diligence and provided support during the client’s successful acquisition of a 70 MW combined cycle combustion turbine plant in the West.  In addition to the typical due diligence scope, Sterling’s reviewed the facility’s compliance with the NERC reliability standards and provided recommendations for improvement.

.

Acquisition Due Diligence and Transition Support for Two Cogeneration Plants
Sterling Energy performed due diligence and provided support during the client’s successful acquisition of two 45 MW gas turbine cogeneration plants in California.

.

Transition Management for a 158 MW Power Plant in New England
Sterling Energy provided transition management services to the buyers of a 158 MW plant in New England.

Renewable Technologies – Wind, Solar, Biomass, Hydro, and Geothermal:

.

Wind Project Screening and Due Diligence for Sempra
Sterling led the screening effort for 1,000 MW of wind projects in the Midwest. In addition, we performed technical and economic due diligence on 800 MW of wind projects. Our scope included evaluation of wind resource assessments, production estimates, PPAs, interconnection agreements, turbine technology, turbine supply agreements, turbine O&M agreements, permitting, and capital and O&M budgets. We developed project economic models based on our assessment of potential energy production, capital costs, and costs for management, operations, maintenance, and administration.

.

Due Diligence for 16 Solar Projects Totaling Over 1,000 MW for Canadian Client
Over the course of two years Sterling Energy conducted due diligence on 16 solar photovoltaic power projects – a total of 1,089 MW – for a large Canadian institutional investment manager.

.

Acquisition and Development Support for 20 MW Canadian Hydro Project
Sterling Energy provided a wide range of support during the successful acquisition of a 20 MW run of river hydro development project in Canada. Sterling’s pre-acquisition scope included interviews with the developer, a review of project information, development of an economic model and an indicative price recommendation. Sterling’s post acquisition scope included a wide range of management support over a period of six months. Sterling reviewed the project hydrology and energy data, which led to a formal review by an independent hydrologist and a subsequent adjustment in projected energy output and project returns. Sterling directed a review of the developer’s execution strategy, i.e., its proposed approach to engineering, procurement and construction. This review was supported by an assessment by an independent engineering firm that Sterling, acting on the owner’s behalf, engaged and managed. The execution strategy review led to changes in the proposed execution strategy and related bid documents. Sterling also visited the project site and met with several engineering and construction firms to explore alternate project execution strategies.

.

Acquisition Support for Multiple Biomass Power Projects
Over a period of 18 months, Sterling Energy performed due diligence assessments of six California biomass projects totaling 106 MW for a new entrant into the renewable energy business.  One project was acquired.

.

Development Stage Wind Project Acquisition and Due Diligence Support
Sterling Energy provided due diligence support for the acquisition of a development-stage 150 MW project.  Our scope included a review of the wind resource assessment and reviews of the wind turbine purchase agreement and construction contracts.

.

Acquisition Due Diligence and Valuation of California Wind Power Project
Sterling Energy performed an acquisition due diligence assessment and valuation analysis of an 11 MW wind project in California.  The project included 139 turbines rated at 65 kW and 95 kW.  A detailed project operating and financial model was developed for valuation purposes.  A development and financial analysis was performed for a 9 MW expansion of the project to take advantage of an unused portion of a power purchase agreement.

.

Greenfield Development and Wind Project Acquisition Support Services
Sterling Energy performed greenfield development and wind project acquisition support services for a major generation company.  Services provided include project feasibility assessment, development plans, development support, acquisition evaluation and due diligence.

.

California 220 MW Wind Power Assets Acquisition Assessment
Sterling Energy performed an acquisition assessment of 220 MW of operating wind turbine projects in California.  The assessment focused on long term production and price forecasts, long term operating and maintenance costs, permit issues, repowering and asset valuation.

.

Valuation Assessment of California Wind Power Developer
Sterling Energy performed a valuation assessment of a California wind power developer with 38 MW of operating assets and 1,500 MW of wind power development assets.

.

Wind Project Development Valuation
Sterling Energy developed a valuation of a 1,500 MW wind project development for a large Japanese trading company.

.

Wind Project Due Diligence
Sterling Energy performed a due diligence assessment of a 24 MW wind project employing Vestas V-90 wind turbines for a large bank considering a tax equity investment in the project.

.

Asset Acquisition and Transition Support for Kenetech Windpower
A Sterling Energy principal led the acquisition effort of the Kenetech Windpower operating assets in the Altamont Pass area of California for a partnership of M&N Windpower and FPL Energy.  Assets included 164 MW of wind power projects, 400 MW of power sales and master land lease contracts.  We performed a due diligence review, developed an acquisition pro forma financial model and led the operating and management transition effort.

.

Acquisition Due Diligence Review for Costa Rica Wind Project
A Sterling Energy principal performed due diligence review of the acquisition of the 20 MW Pesa Project in Costa Rica.  The project employs the Kenetech KVS-33 wind turbine technology in a very energetic wind regime.

.

Large Wind Project Due Diligence
Sterling Energy performed a due diligence assessment for a large financial institution investor for a 283 MW wind project in the Southwest.  The assessment included opinions regarding a new MHI 2.4 MW wind turbine being deployed on the project, production forecasts, operating costs and contract reviews.

.

Acquisition Support for Landfill Gas, Geothermal, Hydro and Biomass Portfolio
Sterling Energy provided due diligence support for the acquisition of a portfolio of alternative energy plants in the western U.S. This portfolio consisted of five biomass, eight landfill gas, one hydroelectric and two geothermal plants. Each project was evaluated in key areas including: leadership and management tools, plant performance, maintenance management, business management and administration, operations management, regulatory compliance, and health and safety. The process included benchmarking the performance of each facility. The results were collated into the “smart book”, a comprehensive project report that the buyer continues to use.

.

Coal Power Plant Acquisition and Biomass Conversion
Sterling was engaged to perform a due diligence assessment for the acquisition of a 50 MW coal-fired circulating fluidized bed power plant for conversion to tire derived and wood fuel.  Sterling Energy managed the initial phases of the conversion program.

.

Acquisition Support for Two Run of River Hydro Plants in Canada
Sterling Energy supported a Canadian client during the successful acquisition of two run of river hydroelectric projects – one of which was not yet commissioned – and two waste heat recovery projects. Sterling’s management support activities on the hydro projects spanned a period of ten months. Sterling’s pre-acquisition support included data room review, visits to the hydroelectric plants, development of economic models and purchase price recommendations, and a due diligence memo. Post-acquisition support included review and negotiations related to the construction punch list, additional site visits, review and subsequent development of project compliance strategies and documents related to WECC mandatory reliability standards, analysis and recommendations related to purchase price adjustments based on performance test results, and direction and coordination of the independent engineer retained by the client.

.

Acquisition Support and Project Management for 15 MW Canadian Hydro Project
Sterling Energy provided a wide range of support during the successful acquisition of a 50% stake in a 15 MW run of river hydro development project in Canada. Sterling’s pre-acquisition scope included interviews with the developer, a review of project information, development of an economic model and an indicative price recommendation. Sterling’s post acquisition scope included a wide range of hands-on management support over a period of six months. Sterling represented the client during the owner’s engineer selection process, contract negotiations, kick-off meetings and initial site visit. Sterling conducted a review of project hydrology that led to the appointment of an independent hydrologist and the subsequent review and adjustment of projected power and energy output. Sterling participated in the review of the proposed Impact Benefits Agreement with First Nations bands. Sterling often acted as the client representative during regular project meetings and calls.

.

Acquisition Assessment for 16 Hydro Projects in the U.S.
Sterling Energy was engaged to support the development of an indicative bid for a fleet of 16 run of river hydro projects totaling 52 MW. Sterling’s scope included a review of seller information and the development of an economic model.

.

Acquisition Assessment for 48 Hydro Projects in Canada
Sterling Energy was engaged to support the development of an indicative bid for a fleet of 48 run of river hydro projects totaling 135 MW. Sterling’s scope included a review of seller information and the development of an economic model.

.

Acquisition Assessment for 29 MW Hydro Project in California
Sterling Energy was engaged to support the development of an indicative bid for a 29 MW run of river hydro project in northern California. Sterling’s scope included a review of data room documents, the development of an economic model and a due diligence report.

Read more about our due diligence and transition support services.

For more information please contact Dave Morgan or Ron Fawcett.

Comments are closed.