In 2002 Dutch power company ,Essent, built a biomass power plant in which biomass was converted to
Question:
In 2002 Dutch power company ,Essent, built a biomass power plant in which biomass was converted to produce bio- energy to 60000 households. Unfortunately, Essent was forced to shut down this power plant in 2012 as it was no longer financially viable due to prevailing conditions.
(a) Can you think of the reason why the power station was forced to shut down under these circumstances?
(b) Would a long term sales agreement have avoided the closure?. Explain
(c) Identify one important measure that the project could have taken to avoid this situation?
(d) Why would lenders , investors in a bio energy plant insist on a long term input - supply contract for the biomass feedstock needed to fuel the power plant ?
Behavioral Corporate Finance Concepts And Cases For Teaching Behavioral Finance
ISBN: 9781259277207
2nd Edition
Authors: Hersh Shefrin