Risk Assessment of Energy Performance Contracting
1 . |
Design Risk |
2 . |
Project Risk |
3 . |
OPerations Risk |
4 . |
Technical Risk |
5 . |
Economic Risk |
6 . |
Payment Risk |
7 . |
Legal Compliance Risk |
8 . |
Political Risk |
9 . |
Contractual Risk |
10 . Force Majeure Risk : |
Flood , Lightning |
11 . Environmental Risk |
12 . Financial Risk
● Interest Rate Risk
○ Exposure to this risk is low if a company does not have long-term interest-bearing assets and liabilities at the balance sheet .
● Market Risk
○ Exposure to fluctuation in the pruchase prices of the merchandises
○ Lower risk if prices are locked in for a certain duration and awareness of market trend
● Foreign Exchange Rick
● Credit Risk
○ Exposure arises from trade receivables ; credit control policy is needed
● Liquidity Risk
○ To minimise the mismatch of financial assets and liabilities and to maintain sufficient credit facilities for contingent funding requirement of working capital
● Cash Flow Risk
○ Exposure to fluctuations in in future cash flows associated with its monetary financial instruments .
the carrots of GITA and other advantageous benefits of being a green building .
FM contributes substantially to decarbonisation and EE for the entire life cycle of commercial , industrial and residential buildings . It is a known fact that air-conditioning consumes between 45 % and 55 % and about 30 % of the total energy consumption in an office building and a light industrial factory respectively . Substantial energy savings can be readily achieved when air-conditioning is operated as per designed conditions and / or following the verified settings and parameters recorded in the system manual after the facilities were professionally tested and commissioned . For sustainable energy savings , high energy-consuming systems such as chiller plants and their ancillary equipment have to be well-maintained through a maintenance regime . It was also established that the optimisation of systems reduces energy consumption . Between 5 % and 10 % savings can easily be achieved when chilled water production is optimised . With the lesser requirement for high ventilation rates post- Covid-19 , blower fan energy can be reduced to the designed condition .
Besides optimisation , aged and inefficient equipment and machinery should be phased out as new ones with advanced technology are always more energy efficient . While this concept is largely understood , the pace of replacement or retrofitting of inefficient equipment is still sluggish . The barriers to this are often cited as the lack of funding , the long duration of ROI , and the risk of non-performance . Facilities engineers can accelerate retrofitting to improve EE when they can competently address the deep financial concerns of building owners .
The solution is the off-balance sheet investment mechanism of energy performance contracting ( EPC ), where an Energy Service Company ( ESCO ) finances the entire capex and project cost , design , procurement , installation , commissioning and maintenance of the retrofitting of the inefficient equipment or
13