Empirical Study on Annual Energy-Saving Performance of Energy Performance Contracting in China

Abstract

A lack of trust in Energy Service Company (ESCo) is the most critical factor affecting the development of Energy Performance Contracting (EPC) in China, compared with other constraints. One cannot easily estimate the energy-saving performance of an EPC project. Under that condition, lack of trust may cause the Energy-Consuming Unit (ECU) to suspect the energy-saving performance promised by the ESCo, thus leaving potentially profitable projects without necessary funding. Currently, specific studies taking an across-projects viewpoint on annual energy-saving performance of EPC projects in multiple subsectors, objectively and quantitatively, are lacking. This paper studies the regression relationships of annual energy-saving quantity in terms of revamping cost and the regression relationships of annual cost saving in terms of revamping cost. The regression results show that there are statistically significant correlations in the above relationships in the nine subsectors investigated. This is significant for ESCos and ECUs, because knowledge on energy-saving performance could contribute to EPC investment decisions and trust relationships between ESCos and ECUs. Then, a multiple linear regression model of revamping cost is set up to analyze its influencing factors. The model indicates that the subsector the sample belongs to, financing, registered capital of the ESCo, and contract period have significant effects on revamping cost. Thus, policy implications regarding innovation of EE promotion technology, clarifying ESCos' exit mechanism, innovation of financing mechanism, and improving the market credit environment for promoting investment in EPC projects, are provided.

Promoting Energy Performance Contracting for Achieving Urban Sustainability: What is the Research Trend?

“…Although assessment of EPC project benefits is regarded as critical for promoting EPC project implementation, only seven papers have attempted to deal with this issue by adopting the cost-benefit analysis method. A close examination of the data analysis methods in the sample told that, in most early studies (e.g., [1,2,26]), descriptive and statistical analysis methods were applied for data analysis because those data were all obtained through industry survey including the Delphi approach (e.g., [3,46]), questionnaires, and interviews (e.g., [36,47]). However, recently, more and more modeling and simulation methods have been applied for data analysis, such as Fuzzy Neural Network (FNN) [61], Monte Carlo simulation [43], Data Envelopment Analysis (DEA) [16], Structural Equation Model (SEM) [56], and game theory approach (e.g., [4,25,50,62]).…”

“… Statistical analysis was useful for carrying out deeper data analysis compared with the descriptive analysis. Normally methods such as factor analysis and regression analysis were adopted for performing statistical analysis (e.g., [7,17,47]).  Modeling and simulation refer to performing data analysis through various mathematical modeling techniques and professional simulating software packages to examine EPC issues, such as the interacted decision among major EPC stakeholders (e.g., [51,54,59,60]).…”

“…The topic of "implementation of EPC projects" attracted the largest proportion of research efforts. This topic concerns how to promote development of EPC project and industry, and has been related to a relatively wide range of subtopics, such as factors affecting implementation of EPC projects, EPC practices in various sectors and regions, EPC practices in public institutions, and major barriers to promoting EPC projects (e.g., [39,47,63]). Compared with other topics, from 2011 to 2018, the number of papers published in this topic kept in a relatively higher level.…”

“…The existing literature revealed two critical indicators-energy savings and economic revenue-for evaluating the success of EPC projects (by comparing the performance between ex-EPC and post-EPC projects) [55,74]. Therefore, significant efforts have been made to figure out how to achieve expected energy savings in EPC projects (for the aim of energy savings) (e.g., [32,54]) or how to achieve optimal energy savings (for the aim of maximizing economic benefits) (e.g., [43][44][45][46][47][48][49][50][51][52][53][54][55]. According to our review, prior studies largely highlighted achieving either energy savings or economic revenue when applying EPC, but seldom concerned the EU's perceptions toward EPC project success.…”

“…to carry out survey with EPC industry practitioners, in order to collect their opinions toward EPC-related issues. This has been a common way for collecting data in the broad discipline of energy management (e.g., [3,7,22,46,47]).…”