Energy Project Financing : Resources and Strategies for Success

88 Energy Project Financing: Resources and Strategies for Success

Relative Risk Level

Associated with Financing Options

———————————————————

Risk

Option

Major

Mitigating

Factors

#1 #2 #3 #4 #5 #6

Variables

Strategies

——————————————————————————————————————————————————Savings verifi-

3

3

3

3

3

1

Needs vary by

Costs paid for accuracy

cation instru-

measure/guarantee

3rd party validation

ments approach

Accuracy

——————————————————————————————————————————————————Establishing base year; 3

3

3

3

3

4

Availability of historical data

Organizations energy management

proce-baseline adjustments

Clarity of formulas in the contract dures; Combined legal& tech. expertise

——————————————————————————————————————————————————Provisions &

3

3

3

3

3

5

Procedures accuracy

Instruments & approach used

cost for M&V

Cost

——————————————————————————————————————————————————Cost of delay/

5

4

3

2

2

1

Audit delays

Recognize costs incurred by delay;

schedule adherence

Financing/ESA

Consider penalty clauses when comple-

Design delays

tion delayed; City expedite reviews, etc.

Construction delays

when possible; Check past practice of

firms during selection process

——————————————————————————————————————————————————Hidden project

1

1

2

4

3

5

Margins, mark-ups

Option 4-6; Reserve right to

costs

Profit

bid equipment; Open book pricing

——————————————————————————————————————————————————Facility control

1

1

1

1

1

5

Contract provisions

Specify acceptable parameters in

problems

contract

——————————————————————————————————————————————————Quality of

5

5

5

5

2

1

Specification for

Selection of service provider to

maintenance

maintenance trainer’s

provide training

training

abilities; cost

——————————————————————————————————————————————————Intrusion/

4

4

4

4

4

5

Contract language—stipu-

Close coordination with maintenance

interruption

late hours of installation

staff; careful attention to operation needs

——————————————————————————————————————————————————Legend: N/A not applicable; 1 low risk; 2 low-medium risk; 3 medium risk; 4 medium-high risk; 5 high risk

Table 4-1. Risk Assessment Matrix (

Continued

)