Economics of third-party central heating plants to supply the Army. Final report

This report analyzes the feasibility of using third-party energy supply contracts to build, operate, and maintain central heating plants on Army installations. It defines the economic and technical factors driving the third-party contract process, the vulnerability of these factors to change, and the conditions that would foster economical third-party heat supply. The content and structure of third-party contracts, and typical participants, are characterized. The responsibilities, roles, objectives, and risk factors of each contract party are also defined. To determine the impact of key contracting variables on overall project viability, financial modeling of life-cycle costs for third-party versus Government-owned heat supply plants was performed, and the results are included. Finally, a checklist for identifying preferred third-party projects is presented.