While energy performance contracting has numerous benefits, it may not be the best option in all situations. You can consider the following when deciding whether an EPC is the best option for the Public Body facility.
A. Ensure you are comfortable with a long-term relationship and the benefits this will provide before proceeding with an EPC. One possible drawback is the loss of flexibility associated with signing a contract with a single contractor for a lengthy time period – this is an obvious corollary of the benefits of using a single source contractor for the entire project.
B. It is important to ask if the potential size of the EPC carries the overhead costs of developing a project by an ESCO. Performance contracts are turnkey arrangements that involve not only the capital investment cost, but also engineering audits, the implementation and corresponding project management time, and ongoing monitoring and maintenance. Thus, the threshold of economic viability for energy service companies may exclude smaller opportunities.
C. It is also important to ask if you are willing to try something new and innovative, given the potential benefits that could be realised. Whilst performance contracting can provide the capital to both public and private sector Customers to fund energy saving improvements, these arrangements may not fit neatly into the Public Body’s existing procurement rules. Customers should check their internal procedures before a performance contract can be signed, and a considerable amount of education may be required to overcome possible reservation of this unconventional approach.