From «ESCOs, Myth and Reality» Ribes&Casado
As we have said, the ESCO´s is a multivariable business that works jointly with technological, legal, and economic aspects; the dealing process requires transversal experts to combine the ruling vectors of both disciplines. It is a barrier to overcome.
It is also commonly known the use of indicators as the Internal Rate of Return (IRR) and the Net Present Value (NPV) to evaluate the acceptability of an investment. These indicators are highly efficient when the analyzed business basics are absolutely understood.
Nevertheless, there are insufficiently explored areas in the popularized ESCO business manuals. This analysis lack has as a consequence negotiation with close-to-mistake dealing rules; the lesser experienced part is the one that suffers the most negative effects.
In ESCO´s business there are four issues to focus on with a higher intensity:
Four issues to focus on ESCO negotiations
- Which is the best time to buy a brand new technology? Technology prices evolution.
- It is necessary an accurate description of each device´s requirements. “Useful life” and “essential performance”.
- The devices substitution investment (DI) and some controversial variables when the capital supplier is the ESCO.
- Former energy bill is not a solid reference when we forecast future gains.