Reduced Legal or Regulatory Costs
Certain types of projects, such as cogeneration projects, involve legal or regulatory costs that an experienced project sponsor can bear more cheaply than an inexperienced operator can.'Vor example, a chemical company or an accompany that undertakes a cogeneration project on its own would face significant costs because of an unfamiliar technology and legal and regulatory requirements. A general contracting firm that specializes in cogeneration projects understands the technology involved and is experienced in dealing with regulatory bodies (which must approve the terms on which the electric utility company purchases the cogeneration project's excess electricity). For this type of firm, a cogeneration project is a normal business undertaking to which it can apply the knowledge and experience it has gained in earlier cogeneration projects. When managed expertly, project financing can lead to economies of scale in controlling legal and regulatory costs. The continued economic viability of the project might depend on continued cooperation with several outside organizations (such as the local utility that buys the electricity) over which the industrial firm has no direct control.