Vodafone - Kabel Deutschland Merger

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Finance from the NOVA – School of Business and Economics

Fuel switching

The present Master dissertation is a project whose main objective is to identify value creation opportunities through fuel switching in the Portuguese industry, services, agriculture and fishing sectors. Fuel switching opportunities are characterized by type of fuel transition, type of technology transition, economy subsectors prone to have fuel switching and value created through fuel shift. Results suggest tomato concentrate, dairy, beer manufacturing and sugar refining subsectors is where prevalence of fuel oil steam boilers is high, for such cases conversion to natural gas steam boilers should result in operations having a ratio of NPV over CAPEX larger than ten and a payback period just under one year. Results further suggest food, beverages, textile, chemicals and wood subsectors currently operate between ten and twenty cogeneration Diesel engines that can be either modified to operate with natural gas or replaced by new natural gas cogeneration systems. Financial modeling indicates that both options have great value creation potential. The current analysis aims to be used by natural gas suppliers and energy project promoters to identify new potential deals as well as by heavy energy consumers to mitigate their energy related costs.