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Our Experience

Strategic International Advisory Limited (SIAL) is ideally suited to assist clients in meeting the challenges of change across the sectors listed below. We have an excellent record of exceeding the expectations of our government/state, regulatory and industry clients. We have extensive experience in developing and implementing end-to-end business processes, project management, organisational change, industry reform and business planning. Our team members have both a thorough theoretical grounding and broad practical experience in these disciplines and sectors.

More details on our key service offerings and some recent examples of this track record are:

1. Energy and Electricity

Short Term Critical Supply (Integrated Resource Planning)

NamPower’s Single Buyer commissioned Strategic International Advisory Limited to develop a solution to forecast critical short term supply deficits. The work required the development of a detailed plan assessing energy demand and creating various short term supply options over the period 2011 to 2018. The project requires:

  • Providing a strategic and tactical advisory role to the project leader;
  • Estimating hourly demand for energy and capacity over the 2011-2018 period;
  • Identifying feasible sources of domestic generation and imports;
  • Developing a methodology and simulation model for determining the optimal solution set, and other feasible scenarios, taking into account probabilistic risk analysis;
  • An assessment of the causes for delays in the implementation of the various IPP projects currently under negotiation with NamPower;
  • Stakeholder interaction with the regulator, Ministry of Energy and major customers
  • Preparing business cases for each candidate of the optimal solution set;
  • Developing a programme management solution to manage all the potential supply solutions;
  • Providing project information and updates to key stakeholders including government, regulator and major customers; and
  • Drafting an implementation plan to allow NamPower to take over the project and implement the solutions developed.

Description of actual services provided by SIAL staff within the assignment:

  • National integrated resource planning, including balancing all potential resources, generation, transmission and demand side management solutions
  • Policy and strategy advisory
    • Strategy and tactical project advice
  • Power system modelling
    • Major developments to SIAL's Namibia Power System model
  • Commercial feasibility modelling of candidate projects
  • Assessment of issues and developing solutions to barriers to private participation (e.g. IPPs)
  • Renewable generation feasibility  assessments
  • Thermal generation feasibility  assessments
  • Renewables resource assessment and generation optimisation
  • Capacity building
  • Demand Forecasting
  • Due diligence of counterparties to IPPs
  • Stakeholder management

Demand-side Management Programme for NamPower

SIAL was commissioned by NamPower's Single Buyer to develop a comprehensive Demand-Side Management (DSM) programme by NamPower.  This work required selection and assessment of the ten most suitable DSM projects, detailed economic analyses for the programme and implementation planning for a 5 year DSM programme in Namibia.

The project involved identifying key campaigns for DSM, developing an economic and financial model, and then preparing a detailed economic analysis, including net present value calculations for each campaign.  In addition a major part of the work was preparing funding business cases for funding from DFIs.  The economic and financial analysis used contemporary best practice methodologies for DSM programmes. 

Description of actual services provided by SIAL staff within the assignment:

  • National Integrated resource planning, including balancing all potential resources, generation, transmission and demand side management (DSM) solutions
  • Policy and strategy advisory
    • Strategy and tactical project advice
  • Power system modelling
    • Developments to, and running scenarios with, SIAL's Namibia power system model
  • Investment planning and feasibility assessments
    • DSM feasibility  assessments
  • Commercial feasibility modelling of candidate projects
  • Capacity building
  • Stakeholder management
  • Commercial advisory
    • Programme design and project selection

Development of 10 Year Strategic Plan for Namibia's ESI

The Namibian Minister of Mines and Energy charged the Namibian Ministry of Mines and Energy and NamPower to organise and facilitate a national strategic summit on the power sector.  SIAL consultants were appointed to strategy advisors and organisers of the strategic work including:

  • Research, coordination and leadership of study teams;
  • Preparation of study teams workshop papers and presentations;
  • Facilitation of 3 day strategic workshop; and
  • Preparation of resulting 10 year plan

SIAL consultants let the working groups (which featured various Namibian energy officials and other industry representatives).  The working groups conducted discussion sessions with all the key stakeholders in the ESI and prepared background documents on the core strategic issues.  SIAL organised the teams for participation in the three day strategic workshop involving 57 of the top ESI stakeholders (including 3 Ministers of the Namibian Government).

Description of actual services provided by SIAL staff within the assignment:

  • Policy and strategy advisory
    • Policy advisory services including scenario analysis and solution developments for broad reform initiatives and specific issues
    • Strategic planning and advisory to industry participants
  • Stakeholder management
    • Strategic interaction with internal and external stakeholders to ensure understanding and support for key programmes
  • Market and regulatory design and Implementation
    • Design and implementation of market and regulatory systems to meet specific policy objectives
  • Investment planning and feasibility assessments
    • Renewable generation feasibility  assessments
    • Thermal generation feasibility  assessments
  • Energy and tariff modelling
  • Commercial feasibility modelling of generation candidate projects

Kudu Gas to Power Project Commercial Advisory

The Kudu project is complex and multi-tiered and much of the early work required the development of project concepts, testing their feasibility and developing commercial positions.  The project is now (2014) in its development phase and SIAL is responsible for commercial negotiations.  The commercial arrangements cover

  • Joint development agreements
  • Ownership,
  • PPAs,
  • Gas supply agreements,
  • Transmission contracts,
  • Operations and maintenance and
  • Construction arrangements.

This work includes developing and testing commercial terms and conditions with acceptable risk allocation.  In addition, a large amount of quantitative analysis is required to assess the implications of different decisions throughout the gas to power value chain.  This includes detailed financial and commercial modelling of the:

  • Upstream development,
  • Power station options, and
  • Pipeline dynamics. 

The integrated nature of the project means that modelling is extended to assessing the financial and commercial impact of options on upstream and downstream counterparties and the financial implications on the parent company.  SIAL's engagement covers all project phases including development, analysis, and contract development and negotiation.

Description of actual services provided by SIAL staff within the assignment:

  • Policy and strategy advisory
    • Strategy and tactical project advice
  • Stakeholder management
    • Strategic interaction with internal and external stakeholders to ensure understanding and support for key programmes
  • Regulatory advisory
    • Regulatory submissions development (licences)
  • Power system modelling
    • Integration of Kudu model into Namibia Power System model
  • Investment planning and feasibility assessments
    • Thermal generation feasibility  assessments
  • Energy and tariff modelling
    • Resource optimisation modelling (e.g. hydro, gas)
    • Commercial feasibility modelling of generation
  • Capacity building (several seconded NamPower staff developed)
  • Commercial advisory
    • Commercial advisory to generation project developments
    • Risk analysis and design of commercial contract structure supporting generation and transmission investments
    • Drafting commercial power agreements (including Joint Development Agreements, PPA, Fuel Supply, Transmission Connection, Customer Supply)
    • Negotiation of commercial power agreements
    • Due diligence of projects, counterparties and governance and regulatory regimes
  • Stakeholder management

Distribution Reform and Tariff Policy Advice and Modelling for EDI Holdings (South Africa)

Policy analysis and advice on mechanisms to incentivise cooperation with proposals for electricity distribution rationalisation
Reviewing extant distribution pricing methodologies that have been employed in setting tariffs
Determining distribution pricing principles that should apply to the REDs – for example:

  • Cost reflectivity (minimise cross-subsidisation), Equitable (everyone should enjoy the benefits of electrification)
  • Avoid price shocks, Avoid economically inefficient by-pass

Identifying the key stakeholders (e.g. EDI, Govt., key customer group representatives, NERSA, Municipalities).

Developing a tariff model to compare the likely financial and operational impacts on key stakeholders from:

  • Tariff rationalisation compared with the existing tariff set (as approximated by the representative sample)
  • Transition options for tariff rationalisation (e.g. phasing and glide paths)
  • Possible (Municipal) tariff surcharges

Consulting stakeholders on:

  • Pricing methodologies (including allocating costs to services)
  • Rationalised tariffs for REDs and the tariff implementation strategy
  • Appropriate categories for users and services

Preparing report on tariff rationalisation study with recommendations on rationalised tariffs

Description of actual services provided by SIAL staff within the assignment:

  • Policy and strategy advisory
    • Policy advisory services and solution developments for specific issues
    • Strategy and Tactical project advice
  • Stakeholder management
    • Strategic interaction with internal and external stakeholders to ensure understanding and support for key programmes
  • Market and regulatory design and implementation
    • Design and implementation of market and regulatory systems to meet specific policy objectives
  • Investment planning and feasibility assessments
    • Distribution investment planning and beneficiary analysis and pricing development
  • Unbundling, cost of supply and tariffs
    • Cost modelling and cost reflective pricing of electricity supply chain
    • Tariff design for each supply chain component
  • Capacity building for commercial and regulatory components in each business unit of electricity supply chain
  • Commercial advisory
Commercial advisory to distribution and supply (retail) transactions

Regulatory Policy Advice (Gas Pipelines) and Implementation Assistance to NERSA

The project required SIAL consultants to develop policy, design a methodology and assist in implementation to approve the maximum prices for gas within the South African piped-gas industry.  The scope of work included: 

  • Documenting a comprehensive review of maximum price methodologies based on international examples;
  • Using economic principles and the legislative guidelines, establishing a process to determine the maximum price of gas that would allow natural gas sellers to recover input costs of gas and licensees to make a profit commensurate with their risk;
  • Reflecting all the objectives of the South African legislation, and identifying any unique features of the South African market; 
  • Preparing a list of information that the Energy Regulator may require from the licensees in order to determine the maximum prices for natural gas;
  • Evaluating the extent to which genuine competition might emerge and the possible impact that the proposed methodology will have on the current gas industry;
  • Developing a spreadsheet model to test the recommended methodology; and
  • Proposing an implementation process.

Description of actual services provided by SIAL staff within the assignment:

  • Policy and strategy advisory
    • Policy advisory services including scenario analysis and solution developments for specific issues
    • Strategic planning and advisory to industry participants
  • Strategy and tactical project advice
  • Stakeholder management
    • Strategic interaction with internal and external stakeholders to ensure understanding and support for key programmes
  • Market and regulatory design and implementation
    • Design and implementation of market and regulatory systems to meet specific policy objectives
  • Regulatory advisory
    • Development of approaches to assess regulatory submissions and compliance
  • Energy and tariff modelling
  • Tariff modelling for segment of energy supply chain
  • Capacity building

Lower Orange River Hydroelectric Power Project

SIAL was the commercial and financial advisors to NamPower, for the investigation into the feasibility of establishing a series of run-of-the-river generators on the Orange River, to provide a total of approximately 100MW of power.  The project entailed carrying out a technical evaluation of the design concepts, preparation of hydrological forecasts for the Orange River catchment, statistical analysis of generation potential based on both historical and forecast flow data, establishing a business case for the project, developing a financial model and seeking financial assistance from DFIs.

Description of actual services provided by SIAL staff within the assignment:

SIAL provided advice on the financial and commercial viability of a 108MW Run of River Hydro Power Development Project for Clackson Power (South Africa) and NamPower, Namibia.  Advice was provided on the alternative value of electricity, the firm versus non-firm (continuous) and the value of potential Clean Development Mechanism (CDM) credits the project could generate.  SIAL undertook detailed modelling and evaluation of the hydrology of the Orange River to establish likely generation profiles.

More examples of Energy and Electricity Credentials

Due Diligence for Wind Generation (Emu Downs)

SIAL consultants completed an assignment providing due diligence on aspects of a wind farm and potential wind development in Western Australia.  The focus of this work was assessing economic and regulatory aspects that affected the viability of the project.

Maui Gas Field and Contract Structure Analysis and Negotiations Project for Gas and Geothermal Trading (New Zealand Government)

One of SIAL consultants the led a team which undertook a major strategic and commercial assignment to evaluate the gas production and pricing data from the New Zealand's largest gas field, the Maui gas field. 

Contract Review Project for New Zealand Treasury (New Zealand Government)

SIAL consultants which undertook a strategic and commercial assignment for the New Zealand Treasury to analyse the Government stream contract and Power Purchase Agreement the New Zealand Government had with Fletcher Challenge Limited's subsidiary Tasman Pulp and Paper Limited.

Todd Energy, New Zealand

SIAL consultants project managed a review of contractual arrangements for production and sales from a joint venture co-generation plant supplying a dairy company and a local distribution network with power.  Modifications were proposed to accommodate complex take-or-pay contract conditions.

Essential Services Regulator of South Australia (ESCOSA)

A SIAL consultant provided expert advice in reviewing and developing alternate wholesale energy cost (WEC) estimates and developing standing contract prices for small customers in South Australia.

New Zealand Electricity Industry, New Zealand

Developed an evaluation methodology based around financial economic principles to evaluate hydro and thermal power generation power stations and projects in New Zealand.  Using this methodology completed over 20 power station valuations, feasibilities or financial due diligence assessments.

Transpower (New Zealand)

Undertook a review of the market and governance structures for the electricity industry in New Zealand so as to advise Transpower on impediments to efficiency arising from existing market and/or governance design, issues affecting market participants as a result of suboptimal design, and potential solutions based on international experience and other relevant benchmarks. 

Hydro Tasmania (Australia)

A SIAL consultant prepared a report on hydro-electric investment opportunities in New Zealand for Hydro Tasmania.  This report included a scan of the electricity environment in New Zealand – citing the current threats and opportunities.  It also looked at a range of potential greenfield hydro-electric developments and a range of existing small power stations that may be suitable for acquisition by Hydro Tasmania.  By using appropriate evaluation criteria to ensure a strategic fit, a shortlist of potential investment opportunities was recommended for further investigation.

Meridian Solutions Limited (New Zealand)

SIAL consultants assisted Meridian Solutions to evaluate ownership and operation opportunities (including BOOT partnering agreements) involving the energy facilities of major energy users in the health and forest product sectors. One project involved plans to build, own, operate, and transfer a cogeneration facility together with onsite standby generation to the Auckland District Health Board (ADHB).  The gas-fired cogeneration facility was to be operated to provide the thermal energy load for heating water and hot water.  The electricity produced, together with the generation capacity available from the standby diesel generator sets, was used to improve the economics of the energy partnership. 

Transpower (New Zealand)

SIAL consultants assisted Transpower with the development of Grid Support Contracts (GSC) – which are primarily to defer major transmission investments in the interests of lowering transmission charges, and to manage/mitigate transmission capacity risks caused by construction delays or higher than expected demand.

Singapore Power Supply Contracts, Singapore

SIAL advised on the detailed design of the generation contracts to supply captive retail loads in Singapore. 

AGL, Australia

A SIAL consultant project managed design and evaluation of processes for load forecasting and power sales contract management for AGL. 

Vector, New Zealand

SIAL consultants undertook a study, for Vector, analysing the market power of generators and their influence on spot prices.

Pulse Energy, Australia

A SIAL consultant project managed design, and implementation of trading systems, including load forecasting, pricing, portfolio management and profitability analysis. 

Transpower Long Term Planning, New Zealand

SIAL prepared a review of international practice in developing very long term (20+ years) transmission planning with an emphasis on the impacts on renewable generation development. 

TransAlta, New Zealand

SIAL consultants prepared supply documents for a tender for wholesale electricity supply to support the retail operations. Particular complexity was added to the process by the need to manage locational price risk in a nodally-priced electricity market.

Pacific Energy Limited (PEL)

One of SIAL consultants was wholesale market manager responsible for the operation of the wholesale electricity generation and purchasing functions of a New Zealand joint venture between Utilicorp and TransAlta. This included the valuation of generation opportunities, negotiation of power purchase agreements and fuel supply agreements for a range of generation types including gas-fired plant, cogeneration units and hydro plant.

Contract Optimisation Project for Natural Gas Corporation

A SIAL consultant led a team on a major strategic and commercial assignment to evaluate the gas contracts Natural Gas Corporation of New Zealand had, and develop a financial model to evaluate ways of maximising its revenue while managing the risks.  A key option in the analysis was the securitisation of the gas revenue. 

Hydro Valuation Project for Dunedin Electricity

A team of SIAL consultants advised Dunedin Electricity on the financial restructuring and business valuation of a hydro generation plant.

United Networks Acquisition by Vector, New Zealand

SIAL provided overall financial due diligence advice to the owners of a power company purchasing a $US 1.6 Billion electricity and gas business.  This role required analysis and opinions on financing structures, operational and regulatory due diligence reports and forecast price scenarios. 

2. Water and Wastewater

Industry review

We undertook a review of the water and wastewater industry within the Wellington region. The project was sponsored by a joint working group comprising the Wellington Regional Council and four city councils. The scope of the review included identifying and evaluating options for changes to industry governance, regulation, operations and structure.

Waste management – contract bid

We assisted Waste Management Ltd. with aspects of its bid for a long term management contract to operate the water and wastewater business of Papakura District Council. Work involved the preparation of a financial model to forecast the changes of the proposed contract benchmark price.

Industry review – Auckland

We were the lead adviser for a review of the Auckland water, wastewater and storm water industry. The review was conducted on behalf of a joint steering committee representing the six Auckland territorial local authorities. The scope of the review included issues and options in relation to industry regulation, potential for competition and achieving amalgamation benefits. The project involved extensive consultation with industry stakeholders and research into international trends in regulation and competition.

 

          © Strategic International Advisory 2014