Any project should be consistent with the site’s long-term master plan. Obviously a building slated for demolition during the likely term of an EPC should not be included in a project. A building scheduled for a major change in operation – such as converting a barracks building into office space – could necessitate a change in the way savings are calculated (baseline adjustment) at some point down the road. So it’s important to anticipate these changes and plan for them in the contract.
As for energy savings objectives, we encourage entities to be open to a wide variety of Cost-saving Measures (CSMs). They may have a desire to investigate certain technologies, and it’s important to include those in the RFP, but an ESP should be encouraged to develop a comprehensive project. That’s where their expertise lies – in their ability to perform assessments, find opportunities to save energy and water, and to develop comprehensive projects. The entity should also have a defined economic benefit or requirement for cost-effectiveness, such as the savings for the project must be able to pay for the project cost within 10 or 15 years.
Financing rates are generally not under the control of the ESP; they are subject to the same market forces that drive interest rates on other types of loans. These finance rates do affect the length of the performance period of an EPC, however. In general, the agency will maximize project investment and the savings delivered when the length of the performance period is maximized, subject to the statutory limit of 20 years (which includes the construction period).