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.

Trust and the intent to cooperate in energy performance contracting for public buildings in China

“…Literature review 2.1 Key factors in EPC EPC, by nature, is a partnering process, where a client organization partners with an energy management firm to identify and achieve energy savings for the client organization (Davies and Chan, 2001). Many studies have shown that energy conservation can be achieved through EPC (Principi et al, 2016;Ruan et al, 2018;Xu et al, 2011). Nevertheless, it is also hard to achieve the success of EPC.…”

“…Critical success factors for EPC projects ECAM 28,1 2001; Ruan et al, 2018), project management (Xu et al, 2011;Xu and Chan, 2013;Rashid and Ye, 2018), project financing (Xu et al, 2011;Xu and Chan, 2013;Ruan et al, 2018), and so on. External factors concern external economics (Xu et al, 2011;Xu and Chan, 2013) and the market credit environment (Ruan et al, 2018).…”

“…Internal factors concern an agreed energy baseline (Davies and Chan, 2001), trust (Davies and Chan, 2001; Ruan et al , 2018), project management (Xu et al , 2011; Xu and Chan, 2013; Rashid and Ye, 2018), project financing (Xu et al , 2011; Xu and Chan, 2013; Ruan et al , 2018), and so on. External factors concern external economics (Xu et al , 2011; Xu and Chan, 2013) and the market credit environment (Ruan et al , 2018). Philosophically speaking, these internal factors play a major role in project success.…”

“…The proportion of public buildings using the EPC model has been relatively low. Practitioners believe that the main concern pertains to the distribution of the revenue accrued from energy saving (Ruan et al , 2018). Moreover, both parties in the transaction worry about the other party’s degree of commitment.…”

“…Although some studies have recognized trust as an important factor in EPC project success (Ruan et al , 2018; Davies and Chan, 2001; Kam-Shim and Gilleard, 2001), the role of trust in EPC projects has not been confirmed. For example, while Davies and Chan (2001) indicated that trust was one of the key elements of performance contracting, the role of trust in EPC projects had not been empirically tested.…”