What is a common practice for assessing project feasibility in ESCO projects?

Conducting a cost-benefit analysis is a fundamental practice for assessing project feasibility in Energy Service Company (ESCO) projects. This analytical approach helps stakeholders evaluate the expected financial returns against the costs associated with the project. By quantifying potential benefits, such as energy savings, operational efficiencies, and reductions in maintenance costs, the cost-benefit analysis provides a comprehensive view of the project's viability.

This method allows decision-makers to assess whether the financial benefits outweigh the initial investments and ongoing operational costs. It also helps in identifying the payback period, internal rate of return, and overall profitability, which are crucial for securing funding and gaining stakeholder approval.

Using such a structured analysis ensures that projects are grounded in realistic expectations rather than speculative assessments, thus enabling informed decision-making and increasing the likelihood of project success.