Project Development
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The first step in the PDC is to establish the project concept, which begins with project identification.

Once a project makes it past the screening process, the hard work of developing technical specifications begins. For a project to be considered "bankable," its proponent must present a robust technical feasibility study that identifies the following elements in some detail:

  • The proposed technology or process
  • Product/technology/material supply chain (e.g., locally available, imported, reliability of supply)
  • Commercially viability of the process
  • Any special technical complexities (installation, maintenance, repair), associated skills required
  • Preliminary designs, including schematics, for all major equipment needed, along with design requirements, manufacturer’s name and contact details, and capital cost estimate
  • Organizational and management plan for implementation, including timetable, personnel requirements, staff training, project engineering, and other logistical issues.
The financial feasibility of the proposed project should include a fully specified pro forma financial worksheet that presents project cash flows, net present value, and internal rate of return. In addition, the financial proposal should contain:

  • Amount of funding secured (e.g., current sources of capital, level of commitment from the project sponsor)
  • Project cost structure, including investment required at each stage, proposed investment structure (debt-equity), risk mechanisms (insurance, currency exposure, guarantees, etc.)
  • Financial reliability (e.g., sponsor’s credit rating, affiliation with government agencies, performance bonds, contract guarantees, sources of domestic financing)
  • Detailed discussion of use of proceeds from the funding agency
Once a project is approved by the clients/ funding agency, the sponsor can begin project implementation. Development efforts around energy projects have some common features that distinguish them from other investment projects.

Once construction is complete and the project operational, the sponsor should monitor the energy savings projected during the feasibility analysis. Several operations issues may affect the monitoring process, including facility usage and equipment changes, and whether the facility undergoes construction. To address such problems, monitoring efforts should be designed to balance the accuracy and rigor of monitoring versus its cost, as well as to develop the baseline in a fashion to allow for re-adjustment if significant changes occur.

Depending on the nature of the project, savings are determined using engineering calculations, or via metering and monitoring, utility meter billing analysis, or computer simulations.