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It is worthwhile investigating whether any local major consumer, such as a local authority, is willing to connect all their buildings to a scheme. This can reduce the investment risk significantly and improve cash flow. The question of economic viability cannot be separated from an analysis of risk, particularly where project finance is the route employed. It will be necessary to carry out an analysis in which as many of the costs and performance figures as possible can be contractually underwritten before presenting the results to a financial institution for a view on financial viability. 

A sensitivity analysis is of assistance in identifying which of the many parameters are the most important when considering the risk to the economic performance of the scheme, and also for indicating the range of likely outcomes. From this analysis the advantages of obtaining longer-term fuel purchase contracts or heat and power sales contracts can be judged. Some community heating schemes are initially established without CHP, due to the large capital outlay involved. It may, however, be instructive to consider the economics of a boiler-only community heating option so that the benefits of the CHP plant itself can be separately demonstrated.

3.10: Environmental Assessments

A preliminary environmental assessment should form a part of the feasibility study, identifying both the advantages and disadvantages of CHP.

3.11: Health and safety

Any construction project is covered by the Construction Design and Management (CDM) regulations. The aim of these regulations is to ensure that safety issues are considered from the start of the project, and this may include the feasibility stage. It will be necessary to appoint a planning supervisor and to carry out an outline design risk assessment.

CHAPTER 4: Contractual Issues

4.1: Works contracts

The EU Directive is implemented in the main by the Public Works Contracts Regulations 1991 (SI 1991:2680). The basic qualifying threshold is currently set at special drawing rights (SDR). The rules apply principally to building and civil engineering works together with associated activities such as installation work. Public work concessions are subject to a more relaxed regime under the rules.

Following the adoption of Council Directive 97/52/EC on 13 October 1997, amending the EU public sector directives to align with the new Government Procurement Agreement (GPA), all thresholds for the public sector should now be expressed in SDR. Where the value of the contract exceeds the threshold, contracting bodies are required to publish a prior information notice giving the essential characteristics of qualifying works contracts following decisions to approve the planning of works. A contract notice should be published in the Official Journal when offers are sought in relation to a works contract. When inviting tenders, negotiated procedures may be used only in exceptional circumstances. 

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