Independent appraisal supported by technical information, asset condition, maintenance history, market evidence, relocation considerations and the valuation premise agreed for the assignment.

Power plant and gas turbine valuation

CESS prepares independent, market-based appraisals of power-generation assets for lenders, investors, owners, operators, insurers and transaction parties. Assignments may cover an individual turbine package, a complete plant or a geographically dispersed portfolio.

The scope and valuation basis are agreed for the client’s purpose. Reports distinguish verified information from assumptions, identify material technical and commercial factors, and explain the market evidence supporting the concluded values.

Assets covered
• Gas turbine generator packages and aero-derivative units.
• Combined-cycle and simple-cycle power plants.
• Steam turbines and generators.
• Reciprocating gas and diesel engine plants.
• Transformers, major auxiliaries and balance of plant.

Uses of an appraisal
Finance and credit: Support for asset-backed lending, refinancing, portfolio monitoring and credit committee review.

Acquisition and sale: An independent view of value, market depth, likely deductions and realistic disposal routes.

Insurance: Valuation on the basis specified by the client or insurer, with scope and exclusions stated clearly.

Internal asset management: Support for strategic review, redeployment, impairment considerations and disposal planning. Accounting or tax conclusions remain the responsibility of the client’s appointed advisers.

The CESS Valuation Process

1

Instructions and information requirements

Confirm the asset, ownership and location, valuation date, purpose, premise, required value definitions, reporting standard and timetable.

2

Technical review

Review the equipment schedule, configuration, operating history, maintenance records, OEM status, preservation, known defects, documentation and included balance of plant.

3

Inspection where required

Undertake a site or storage inspection when physical condition, completeness, access or preservation may materially affect value. A desktop appraisal may be appropriate where the available evidence and intended use support it.

4

Market and relocation analysis

Consider current buyer requirements, comparable transactions, OEM lead times, technical suitability, frequency and emissions constraints, dismantling, transport, reinstatement and other buyer costs.

5

Report and conclusions

State the valuation basis, effective date, assumptions, limitations, market context and concluded values. Fair market value, orderly liquidation value, net orderly liquidation value and forced liquidation value are included only where required and defined for the engagement.

Lender and investor reporting
For financing work, the report can address marketability, likely buyer population, value sensitivity, time-to-sale assumptions, material technical dependencies and the distinction between in-situ value and equipment value for relocation. The final scope should reflect the lender’s credit process and reliance requirements.

Independence and conflicts
Add an approved statement explaining how CESS identifies and manages prior involvement, contingent remuneration and any existing sale or acquisition mandate. This is particularly important where the same asset has been valued and marketed at different stages. Do not use “independent” without this supporting policy.

Discuss a valuation
Provide the asset schedule, location, purpose, required valuation date and timetable for an initial scope review.

We certainly do appreciate your appraisal with regard to the surplus GE 7FA gas turbines we engaged you to value. We need to be able to rely on the advice of market specialists like CESS, especially in niche markets like this one. If it wasn't for your quick reaction to changing market conditions, we might have made a big mistake! Thanks also to Ken, George, David, Linda and the rest of your staff involved in this assignment. I am hopeful we can use your services again in the future.

Bank of America - USA

Chris Wall, Vice President (Equipment Management)
Valuation

In March 2000, PSEG Global appointed CESS as our evaluation consultants. We are pleased to confirm that the services provided by CESS during the co-ordination of the site visits and subsequent liaison with the OEM and other potential contractors for the dismantling, overhaul and relocation of the plant into Italy were efficient, diligent and most valuable. We would be accordingly be pleased to recommend CESS to any potential client in this or similar capacity and from their professionalism and track record we have every confidence in their overall project capabilities in this type of engineering support.

PSEG Global Ltd - UK

Dominique Chaniolleau, Director - Technical Services
Brokering