Feasibility studies are a form of decision-making tool that require research, data collection and analysis to evaluate investments in new technology or projects. They answer key questions about a project’s technical and financial viability, including project structure and organization and the costs, benefits, and risks involved. The analyses completed are so important that many grant programs require feasibility studies before making project grant awards. Financial investors and banks commonly may require the most rigorous form of feasibility study prior to making any investment.
To develop a catalog of steps needed to perform a successful feasibility study, we reviewed the literature on feasibility studies, as well as dozens of studies done on the subject of anaerobic digestion. We also talked with a range of experts in project development.
General Assessment Study or Screening—Most basic feasibility studies assess the viability of different opportunities within a defined industry or geographic area. On a project level, a general assessment determines if a potential project meets basic criteria thresholds to support more in-depth analysis?
Project-Based, Techno-Economic Study—A higher level of research and analysis is used to establish project viability. These studies consider the costs, benefits, and risks of building a specific type of project, with specific technology, on a specific site. For this purpose the study might incorporate readily available data about technology choices and make assumed adjustments about how it would perform under site-specific conditions. This level of analysis forces project advocates to put their ideas and assumptions on paper and test whether the conclusion is sound and realistic.
Investment-Grade Study—The most rigorous feasibility study is used to validate the marketability of a specific project from an investment perspective. It would look beyond basic techno-economic viability to establish the actual planned inputs and outputs of a project. It can include detailed equipment specifications and estimates, as well as detailed mass, energy, and water balance calculations. It may also identify key providers of feedstocks as well as potential end users. Detailed scheduling may be required to complete financial analyses accurately. With a detailed proforma showing financial analyses of cash flow and return on investment, this high level of feasibility study is sometimes termed “investment-grade.” These types of studies often include sensitivity analyses to explore the impact on a project’s viability from changes to one or more key assumptions. Sensitivity analyses can clarify which of the many assumptions made are most critical to project success.
Getting the best, most reliable and accurate data is perhaps the most critical element of a successful feasibility study. Typical steps observed in many feasibility studies:
We will continue to evaluate methods to add value and publish the full results in a Anaerobic Digestion technology brief on this topic.
Jim Jensen, Sr Bioenergy & Alt Fuel Specialist, Washington State University Energy Program firstname.lastname@example.org
Craig Frear, Chad Kruger, and Georgine Yorgey, Center for Sustaining Agriculture and Natural Resources, Washington State University
This research was supported by Biomass Research Funds from the WSU Agricultural Research Center; and by the Washington State Department of Commerce.
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