Introduction
Renewable energy is energy generated from natural resources. These sources are referred to as renewable due to their ability to naturally replenish themselves after being used (Twidell, 2006, p. 18). Approximately sixteen percent of the final energy consumed globally is from renewable resources. The renewable natural energy sources include wind, sunlight, geothermal, biomass, tides and rain.
The problem associated with the usage of non-renewable energy resources is that they cannot be replenished as in renewable energy resources. This has led to concerns by all the stakeholders on the sustainability as they form the bulk of the energy sources of the world (Kaltschmitt, 2010, p. 101).
The non-renewable energy sources will dwindle over time, which makes them expensive, as well as environmentally non-friendly. In contrast, renewable energy sources are sustainable over time as they replenish themselves, easy to use, less expensive and environmentally friendly.
Therefore, a paradigm shift from non-renewable energy sources to renewable energy sources is necessary. In this course, it is estimated that the use of wind power is growing at a rate of approximately 30% annually worldwide (Sorensen, 2010, p. 224). The countries and continents most embracing renewable energy sources are the United States, Brazil, Asia and Europe.
The main purpose of this project is to identify the most suitable renewable energy source to introduce to the local community. The project team is to carry out a feasibility study on the viable renewable energy sources to be introduced in the community. The project manager will be charged with overall oversight of the project.
The assistant project manager will be in charge of two departments, which are the marketing and financial departments. The financial department will deal with all the financial aspects of the project, while marketing department will handle the marketing of the energy source in the society.
Motivation
The key drive for the project is to provide a clean and sustainable energy source to the local community where the company is situated. However, there are other stakeholders who the company must consider in its endeavors in order to meet its objectives and mission.
To find out the expectations and obligations of each stakeholder, it is necessary to undertake the research. Questionnaires and other techniques are used to determine their expectations and obligations.
The first stakeholder is the public and community. A study on a sample of the community reveals the following expectations; a reliable, environmentally friendly and cheap source of energy. Most of the residents reveal that they would be willing to substitute their non-renewable energy sources with the renewable ones if they possess the above qualities. Based on this community need the project is initiated to meet it.
The project is to obtain a license from the environmental regulation agency. The project must comply with all the legislations governing the use of renewable energy in the country. The other stakeholder is the AD chamber of commerce. The company will have to set up the required documents such as the articles of association to receive its certificate of operation from the chamber of commerce.
The company will obtain its starting capital from the national bank. The bank will also handle the standing orders of the company. The payroll system of the company will be outsourced to the bank. The project will be obligated to guarantee financial health by a viable return on investment to payback the loans.
Other stakeholders to the project include: research institute to perform market trends, survey analysis and also research and development. Modern insurance company will provide employees with insurance in compliance with factory employee safety regulations.
The trust fund of the company will cater for recruiting professionals for the project, providing additional funding, performing feasibility studies for the project and providing support and guidance to set up the business. Mediamax Media Company will help devise a marketing plan for the company and its products and lastly various vendors will supply equipments, materials and items required for the project.
Solutions Review
There are three solutions available to the company. They are those strategies that can be employed to provide a clean and sustainable source of energy for the community while guaranteeing the company a return on its investment.
Wind
The first option to the company is to set up a wind farm. Wind turbines with a power between five megawatts and six hundred kilowatts, considering the size of the wind farm, can be run by air flow (Twidell, 2006, p. 168). The power of the wind turbine will be determined by the speed of wind.
The company will have to find an appropriate location for the wind farm. High altitude and offshore areas are preferable compared to inland locations, because there are higher wind speeds, therefore, resulting in higher energy levels.
The benefits of using wind power include a stream of income for the company. The company will earn profit from the supply of the wind power to the community.
The expected stream of income will be the discounted present value of income. Another benefit is clean and sustainable energy for the community. The community will also benefit from lower prices of electric power. Over the long run, the community will also benefit from lower levels of environmental pollution.
The costs of the project are: the initial cost of obtaining the wind turbines and land to set up the wind farm. The company will also incur a cost from the interest payments on the loans to purchase the equipments and land. Another cost is the opportunity cost on the use of land for generation of wind power. The final costs that will be factored in are employee salaries and depreciation expenses on the equipment used in the wind farm.
Solar Energy
The second option available to the company is to set up a solar power generation plant. The company can acquire solar technologies to be used to generate energy and distribute to the community. They can also acquire solar technologies that they can set in peoples’ homes. This would be cost effective as they will not have to acquire land for setting the solar power generating plant.
The benefits include: a stream of income for the company. The expected future flow of income will be the discounted present value of cash flow. The community will benefit from a cheap alternative energy, reduced environmental pollution and sustainable source of energy.
The cost includes: the initial cost of obtaining solar technologies, lost productivity by substituting non-renewable energy by solar power, opportunity cost of the resources used and depreciation expense on the equipments. Other costs include salaries to employees, interest payments on loans and lost production due to power outages during winter.
Biofuel
The company can set up a biomass processing plant to produce a variety of products such as bioethanol, biodiesel and biogas. The company will use raw materials such as sugarcane, vegetable oils, animal fats and recycled grease.
The benefits are a stream of income for the company, cheap and environment friendly energy sources, sustainable energy resources and higher employment opportunities in the community. It will result in reduced emission of green house gases into the atmosphere in the long run.
The costs of the project are initial capital to set up the plant and acquire raw materials, interest payments on loans, opportunity cost of the resources employed in production and depreciation expense on the equipments used in production. There are other miscellaneous costs such as salaries, operating expenses and the cost incurred in substitution.
Decision Model
The company will consider all the three options available to it. It will use the cost benefit analysis to make the decision. The option which has the most benefits relative to the costs will be taken by the company. The company will assign weights to the benefits and costs of each option.
It will compare the score of each alternative available. Other variables will also be taken into consideration such as the community reception to the alternative energy source, the availability of raw materials and ease of assessing replacement parts for equipments used in the production process.
Assigning weights to each option gives the following scores. The first option of using wind power gives a positive score. The weights of benefits obtained outweigh the weights of costs to be incurred. This generates a final positive score. However, there are other issues to consider, such as availability of high altitude or offshore areas in the community where more energy can be generated due to high wind speeds.
The option to use solar power also generates a positive score. Assigning weights to benefits of using energy will outweigh the weights assigned to the costs. However, there are other issues to consider before choosing the option. The amounts of days and intensity of sunlight in the area, consider whether to set up a plant or set up the solar on the houses of the clients of the firm will be factored into the decision model.
The third option also generates a final positive score. The gains that will be achieved from the use of biofuel will outweigh the costs associated with it. The project managers will therefore, address other factors to influence their decision models. They will consider the finances available to the company and accessibility to raw materials to use in the biofuel plant.
The project management chose to go with setting up a wind farm. They chose the option because of the availability of a high altitude area, which was a good site for the wind farm. The decision is also viable because of the availability of wind all year around, therefore it is a reliable and sustainable source of energy.
The other alternatives were rejected on the grounds that sunlight was not a year round phenomenon therefore, not a reliable source of energy while biofuel was rejected due to the relative high cost of obtaining biomass for the plant and the high capital needed to start a biofuel processing plant.
Most of the local people also supported setting up the wind farm as the area was unproductive and also due to the benefits of reduction in environmental pollution.
Summary
The decision to set up a wind generating plant is in line with the mission of the project to provide a clean and sustainable source of energy to the local community.
The company will use three megawatts of wind turbines in the project. The project management team will be appointed to come up with all the critical activities to be carried out for the project to be completed. They will come up with the cost and time to take for the project success.
The project meets the expectations and objectives of all the stakeholders. For the public and community, it meets their expectations of a clean, reliable and cheap source of energy necessary for them to adjust and adapt the new system (Kaltschmitt, 2010, p. 291). It is also within the legislations related to energy and environment according to the environmental agency.
The project will also bring a good return on investment shown by the payback period of the project. Calculations show that through the expected streams of income, the project will be able to pay off its liabilities within the first seven years. The streams of income are calculated from demand projections and then discounting the net present value of cash flows from the project.
The project will also meet other stakeholders’ expectations for its success. The projects will receive certification from the chamber of commerce, the employees will be insured, and the funds will be provided to cater for support and guidance of the business and handle other issues such as recruiting exercises and carrying out of feasibility studies.
Finally, the media company will market the project, the research team will do market analysis and also continuous development in the firm while the individual vendors will supply the project with equipments, materials and items needed for the project.
The wind power project will meet the needs of all the stakeholders of the project. Implementation of the project is the last task of the project management team. Successful implementation will be crucial with them monitoring the project for continuous improvement in policies and procedure.
Appendix
Project Manager
Task Time (months) Budget ($)
- Approval of logs of members periodical –
- Approval of budgets periodical –
- Coordination of duties periodical –
- Prepare quarterly reports 4 700
Assistant Project Manager
Task Time (months) Budget ($)
- Monitor operation of departments periodical –
- Stand in for project manager periodical –
- Coordination of duties of departments periodical –
- Secure funds for project 1 –
Financial Manager
Task Time (months) Budget ($)
- Acquire funds 1 –
- Prepare budget 2 600
- Prepare quarterly statements 3 300
- Monitor use of funds by departments periodical –
Marketing Manager
Task Time (months) Budget ($)
- Manage advertisements periodical 2000
- Consumer education 4 1500
- Manage distribution 6 1200
- Promotional campaigns periodical 1500
The project will be completed within the first year and performance of tasks must meet the budget. There are other tasks that are not listed, such as acquiring equipments and material and many other menial tasks.
Swot Analysis
This rivets a scrutiny of the strengths, disadvantages, opportunities and warnings to the project.
The strengths to the project include: a receptive community that is adaptive to change its energy source, viable source of finance from the national bank, competent management team for the project, a good location for the wind farm and a competitive business environment for the business characterized by other supporting business such as banks, media companies and other firms.
The weaknesses are those issues that may hinder the business from meeting its goals and objectives. The business may be exposed to risks when setting up the wind farm in the community. According to Bohm (2009, p. 19), lack of experience in the location of the business may be exposed to unforeseen risks that will distort future flow of income from the project.
The risks include competition from other renewable energy sources, change in public opinion as related to renewable energy sources, maintaining a good public image of the company and having competent and motivated employees.
The opportunities of the business include: continuous research and development by the research team. Research and development can lead to quality products and services offered to the consumer. It will lead to capturing of the market niche by the company.
The threats that may hinder the success of the business include: change in public opinion due to the company’s failure to meet the demand of the society, change in legislation that the business may not be able to comply to and increased competition from other sources of energy such as non-renewable energy and other sources of renewable energy.
The project management team will in-calculate the above analysis to best capitalize on the strengths and opportunities of the business will, at same time devising strategies to minimize the weaknesses and threats to the business.
For the business to survive in the competitive and swiftly varying setting, the project managers should put in place mechanisms to continually adjust to the needs of every stakeholder, to ensure success of the company in the long run.
References
Bohm, A., 2009. The Swot Analysis. Grin Verlag, Munchen.
Kaltschmitt, M., 2010. Renewable Energy: Technology, Economics and Environment. Springer, New York.
Sorensen, B., 2010. Renewable Energy: Physics, Engineering, Environmental Impacts, Economics & Planning. Academic Press, Massachusetts.
Twidell, J., 2006. Renewable Energy Resources. Taylor & Francis, London.