Following a Decarbonisation Options Assessment, a variety of decarbonisation options will have been identified that could be implemented to reduce energy demand, optimise energy efficiency, and/or deploy low and zero carbon technologies in order to achieve NZ for Operational Energy.
Whilst decarbonisation options will have been assessed for their relative carbon reduction potential and alignment with a NZ Roadmap, it is still important to ensure that decarbonisation options demonstrate Value for Money (VfM). This means that VfM at a decarbonisation option (at project level) would be achieved when the optimum available combination of whole-life costs and quality (or fitness for purpose) is achieved whilst delivering the anticipated carbon emission savings. It is worth remembering that VfM is not simply the choice of goods and services based on the lowest cost bid.
VfM appraisals should include an options appraisal to consider the relative costs and benefits of the shortlisted decarbonisation options being considered. Given that a variety of decarbonisation options may be available, consideration should be given to whether there are comparative or alternative decarbonisation options, or a combination of decarbonisation options with an optimal interactive effect, that could be used to achieve the same or similar carbon emissions savings but achieving better VfM.
In the context of decarbonisation, a comprehensive options appraisal should include quantitative and qualitative assessments to determine VfM but should also evaluate the carbon savings potential (see section 7.14) and additional Benefits and Outcomes that could be achieved through the decarbonisation option(s), such as meeting NZ Deadlines, Social Value and Building Level Benefits (see sections 8.2 and 8.3). The quantitative and qualitative options appraisal assessment to determine VfM should also include the impact of other costs specific to PPP projects, i.e., the additional costs associated with time, technical advisor and other professional advisor fees. The Change processes in PPP contracts can be complex, time consuming and, depending on value, may require a dedicated team to be assembled to manage the process. The level of complexity may also vary depending on whether the contract in question requires a different process based around different values of any proposed change i.e., Low, Medium and High value changes.
Other key factors that should be considered in the assessment of VfM will be:
> Viability of decarbonisation option(s) e.g. can the proposed decarbonisation option(s) integrate with each other and with the building?
> Desirability of decarbonisation option(s) e.g. can service requirements be met with a less carbon intensive solution?
> Achievability of decarbonisation option(s) - is there market appetite (this is particularly pertinent with decarbonisation options that are new/emerging technologies or markets)?
The HM Treasury Green Book sets out methods and frameworks for the appraisal and evaluation of projects and policies and many of these concepts will be relevant for public sector organisations. As a minimum, a VfM assessment should compare the costs of the decarbonisation options at a project level against 'do nothing' and 'minimum' scenarios (see section 7.9 for how these are modelled in terms of a NZ Road Map).