Commercial viability of privately financed heating systems in Europe — a case study

This paper presents a detailed case study of how a European heating contractor analysed the commercial viability of privately financing a critical component of the construction of new apartment heating systems in return for ongoing maintenance contracts. The adaptation of some of the concepts of more complex concession or Build Own Operate and Transfer (BOOT) contract arrangements for use on a small scale project are discussed. Some details of this simple form of privately financed contact are presented. Specifics of the funding mix between construction and fitout costs, capital equipment costs and ongoing maintenance agreements are discussed and related to the market price for energy. The example demonstrates the potential for this type of delivery mechanism for small scale construction. The constructor maintained a reasonable margin and profit during a period of economic recession, new clientele was developed and business expanded to provide a whole of life service. The developer was able to renovate a facility for a lower capital cost than would otherwise have been possible, and the user gained a state of the art heating system without any increase in heating costs.