Beginning with the set of feasible energy project opportunities that you identified in Step No. 4, Step No. 5 further analyzes them as a group to develop a comprehensive energy program. This step is the pivot point in the energy services project delivery process because it determines if the customer will complete the remaining six steps. The result of Step No. 5, which develops the technical portion of the energy services project, is a written proposal that summarizes the planned project and serves as the basis for the agreement between the electrical contractor (EC) and customer for completing this work.
The energy services technical proposal should provide the customer with a clear map of how it can achieve its energy and sustainability goals. It should be realistic, consisting of independent energy initiatives that, when taken together, will support one another and form an integrated energy services project. The project proposed should be tailored to the customer’s goals and reflect a realistic evaluation of the customer’s capital budgeting criteria, financial situation, managerial and technical abilities, and operation and maintenance capabilities.
For example, a customer wants to install a photovoltaic (PV) array on a roof to offset a portion of the building’s current energy use and demonstrate its environmental commitment to employees, customers and the public. In performing the first four steps in the energy services project delivery process, you discover your customer could take on energy conservation and efficiency projects that are simpler, less expensive, and with a faster payback (rather than starting with a large project such as installing a PV array). Additionally, by implementing the low-risk, high-return energy conservation and efficiency projects first, the energy use of the customer’s building would be reduced. Therefore, the planned PV array would produce a higher percentage of the facility’s energy use and improve the customer’s return on investment (ROI).
Taking a holistic view such as this to address the customer’s overall energy and sustainability goals establishes the EC as the customer’s partner in the energy services project and an expert in the field. The EC’s energy services project proposal would include not only the PV array but also the energy conservation and efficiency projects that have an almost guaranteed ROI and a positive effect on the PV array’s payback.
Developing the project scope
The energy services project proposal’s technical scope should consist of a set of mutually supportive initiatives that result in a comprehensive energy program for the customer. The set of energy project initiatives identified in Step No. 4 have already been screened for feasibility, and the next step is to select the opportunities that best support the customer’s energy and sustainability goals, present the lowest risk, and result in a reasonable ROI.
For starters, rank the available energy project initiative based on criteria such as lowest cost, simplicity to implement, quickest payback and other similar factors. Normally, energy conservation project initiatives will be first, followed by energy-efficiency initiatives that often require a higher initial investment and corresponding longer payback, and finally energy production initiatives. Energy production alternatives, such as the PV array mentioned, follow energy conservation and efficiency alternatives because energy production initiatives have the highest initial capital cost, can have their effectiveness improved by first implementing energy conservation and efficiency projects, and, finally, are riskier due to future uncertainty and the characteristically long-term payback periods associated with these projects.
Consider the schedule
Last but not least, when developing the energy services technical proposal, don’t forget to consider the project schedule and its effect on the economic viability of the energy project initiatives. This is especially important for energy production initiatives that include PV systems, wind turbines, fuel cells and other alternative-energy technologies. Advancing technology, volatility in the global energy markets, government budget concerns, and a shifting public perception about the importance of environmental issues is resulting in federal and state governments and utilities re-evaluating incentive programs for energy conservation and alternative-energy production. Many of the government incentives associated with these technologies are set to expire in the next few years, and there is concern that they will not be renewed. When developing the energy services project technical proposal, the EC should consider current incentive expiration dates and the uncertainty that existing incentives will be renewed.
The author thanks ELECTRI International Inc. for its sponsorship of the research project, “Energy Roadmap: Electrical Contractor’s Guide for Expanding Into the Emerging Energy Market,” on which this article is based.
GLAVINICH is director of Architectural Engineering & Construction Programs and an associate professor in the Department of Civil, Environmental and Architectural Engineering at the University of Kansas. He can be reached at 785.864.3435 and firstname.lastname@example.org.