No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
Public-Private Partnerships for Energy Efficiency Projects: A Win-Win Model to Choose the Energy Performance Contracting structure
Abstract
To stimulate private sector investments and promote energy efficiency, in recent years through Public Private Partnership arrangements, the public sector uses private companies, the Energy Service Company (ESCO), to perform one or more activities related to the provision of energy services, and the contractual arrangements defining the contracting parties' obligations and rights are traditionally based on Energy Performance Contracting (EPC). Although EPC is a valuable model for delivering public energy efficiency projects, the adoption is still far from its vast potential mainly because of two unresolved issues: the dilemma of equally sharing the benefits between the public and private parties so as assuring a win-win condition, and the lack of adequate public procedures that support the selection of the most appropriate EPC schema given certain circumstances and projects' characteristics. The existing literature have analyzed the advantages of EPC mechanism for delivering energy efficiency projects and explored the critical success factors of EPC. However, it does not provide any solution to address the issues that hamper the adoption of EPCs in public sector. To fill this gap, this paper proposes a model for assessing and benchmarking the net benefits of the different EPC structures, so as choosing the EPC schema that creates a ‘win–win’ solution for both the ESCO and the government, by balancing the private sector's profitability needs and the public sector's economic interests. The assessment of the benefits of the EPC schema for contractual parties and the benchmark among the contracts are based on an economic approach, which expresses the net benefit gained by each party through the three EPC contracts in monetary terms and benchmarks the three EPC schema through the Net Present Value (NPV) method. The win-win condition is ensured by the contract that minimizes the difference between the net profits (NPV) gained by the contractual parties. This will support the public authority in the decision-making process about the EPC structure to be adopted to develop an energy efficiency project as a PPP. To demonstrate the applicability of the proposed model, we apply it to an energy efficiency project launched by the Municipality of Noci (Southern Italy).
... PPP ventures must explore risk assessment and allocation elements using strict contract performance (Hartman et al., 2020) and smart monitoring of progress (Toxopeus & Merfeld, 2023). As such, contract duration (Batra, 2021;Hartman et al., 2020) and structure (Carbonara & Pellegrino, 2018) are suggested to be among the critical factors to determine how well the PPP will perform. In lieu of this requirement, the performance of those involved in the PPP will be closely tied to its success (Hartman et al., 2020;Biygaunte et al., 2019). ...
... Biygaunte (2019) (Carbonara & Pellegrino, 2018). ...
... Pellegrino & Carbonara, 2018). These models, such as those used in energy performance contracts, ensure economic and technical viability through rigorous evaluation and simulation(Pellegrino & Carbonara, 2018). ...
Objective: This study aims to systematically analyze and categorize the challenges, barriers, and solutions associated with Public-Private Partnerships (PPPs) through a review of recent literature, providing actionable recommendations to improve PPP implementation and outcomes. Theoretical Framework: In this topic, the main concepts and theories that underpin the research are presented. Institutional Theory, Governance Frameworks, Risk Management Theories, and Collaborative Governance, stand out, providing a solid basis for understanding the context of the investigation. Method: The exploration of PPP challenges and barriers are conducted by analyzing recently published research on PPP through a systematic literature review. This to establish an understanding of challenges and barriers to suggest specific intervention effort and most ideal solution a to ease PPP issues. Results and Discussion: The article analyzes 25 selected articles to develop specific categories by grouping together various challenges, barriers and solutions that can be deduced from the selected literatures discussing PPP implementation process to provide comprehensive view for both practical use and theoretical understanding. Research Implications: The practical and theoretical implications of this research are discussed, providing theoretical understanding and practical application of PPPs These implications could encompass a robust framework that can be utilized across various sectors and countries. Originality/Value: This study contributes to the literature by providing a comprehensive synthesis of the challenges, barriers, and solutions associated with Public-Private Partnerships (PPPs). The relevance and value of this research are evidenced by its systematic categorization and analysis of these issues, which offers a structured approach to understanding the complexities of PPPs. By integrating diverse perspectives from multiple countries and sectors, this study advances the discourse on PPPs and enhances the generalizability of the findings.
... The selection of an appropriate business model plays a fundamental role in the development of EPC projects [16,42,49]. In emerging markets like Iran, the localization of EPC business models is still lacking, and the lack of alignment with local laws can lead to project failure. ...
... In emerging markets like Iran, the localization of EPC business models is still lacking, and the lack of alignment with local laws can lead to project failure. The credibility of the parties involved in the projects forms the foundation for trust between them [49,50]. A lack of credibility can result in energy users or ESCOs failing to fulfill their responsibilities, ultimately leading to conflicts within projects [23,49]. ...
... The credibility of the parties involved in the projects forms the foundation for trust between them [49,50]. A lack of credibility can result in energy users or ESCOs failing to fulfill their responsibilities, ultimately leading to conflicts within projects [23,49]. ...
Building energy performance contracts have emerged as a highly effective strategy for reducing energy consumption in both developed and developing markets. These projects inherently involve risks, and a comprehensive risk analysis can greatly enhance their successful implementation, especially in emerging markets. This research aims to analyze risks associated with building energy performance projects, considering their interrelationships, prioritization, and the ranking of optimal project types based on the analyzed risks. Given its position as the largest electrical energy consumer in the Middle East and its status as an emerging market, Iran was selected as the case study for conducting the risk analysis. Thirteen risk factors were classified into four distinct risk groups, and their relationships and priority weights were determined using a hybrid DANP approach. Subsequently, the VIKOR method was employed to rank the most-advantageous project types based on their risk priorities. The findings of this research identified project lifecycle risks as the highest-priority risks, while external risks were determined to be the most-influential among all identified risks. Moreover, the implementation of packaged public projects was identified as the most-favorable alternative for promoting building energy performance projects in Iran and similar emerging markets. By providing a comprehensive understanding of risks, this study offers valuable insights that can aid emerging and developing markets in successfully implementing energy performance projects and improving overall energy efficiency.
... Once deployed in a remote location, there are specific connectivity and logistical difficulties encountered (Kukah et al., 2022c;Kukah et al., 2022d). The power sector includes technically demanding projects that typically include many subprojects and necessitate the incorporation of many technical fields (Carbonara and Pellegrino, 2018). ...
... A limitation of this study is that this study was mainly conducted in the Ghanaian power 2.2 Risk factors in public-private partnership power projects Ghana's lack of experience with PPPs, the current regulatory environment and the state of the evolving trend in PPP projects all serve to dampen expectations that it will be the panacea for the country's infrastructure problems, especially in the power sector (Akom et al., 2020;Eshun and Amoako-Tuffour, 2016). It is important to remember that power, transmission and distribution losses are unavoidable because energy, especially electricity, cannot be stored in large quantities, the electrification system is highly capital intensive, and generation plant capacity has a generating limit (Atuguba and Tuokuu, 2020;Carbonara and Pellegrino, 2018). Because of the system's features, short-term solutions and an emphasis on expanding energy infrastructure are insufficient to address any potential issues. ...
... Given that a PPP in the power sector can be viewed as a set of rights, obligations and risk assignments among different project participants, the design of any PPP contractual arrangement must consider how public and private partners can price and optimally distribute risks among themselves (Xu et al., 2010;Yu et al., 2018;Olufemi, 2013). To put it another way, when designing PPP power contracts, risk management and who is best suited to handle it must be carefully considered (Carbonara and Pellegrino, 2018). As a result, it can be argued that the true performance of PPP power projects is determined by how effectively risk is shifted from the public to the private sector and spread (Mazher et al., 2019). ...
Purpose
Public-private partnership (PPP) power projects are associated with varying risk factors. This paper aims to develop a fuzzy quantitative risk allocation model (QRAM) to guide decision-making on risk allocation in PPP power projects in Ghana.
Design/methodology/approach
A total of 67 risk factors and 9 risk allocation criteria were established from literature and ranked in a two-round Delphi survey using questionnaires. The fuzzy synthetic evaluation method was used in developing the risk allocation model.
Findings
The model’s output variable is the risk allocation proportions between the public body and private body based on their capability to manage the risk factors. Out of the 37 critical risk factors, the public sector was allocated 12 risk factors with proportions = 50%, while the private sector was allocated 25 risk factors with proportions = 50%.
Originality/value
To the best of the authors’ knowledge, this research presents the first attempt in Ghana at endeavouring to develop a QRAM for PPP power projects. There is confidence in the model to efficiently allocate risks emanating from PPP power projects.
... Ghana's power sector faces a number of challenges, including insufficient power supply infrastructure that necessitates significant expenditure, excessive dependency on hydro and gas, insufficient access to energy and high fuel costs for electricity generation, transmission and distribution losses, insufficient regulatory capability, regulation, organisational and management challenges and climate change vulnerability (Eshun and Amoako-Tuffour, 2016;Kukah et al., 2023). It is important to note that power, transmission and distribution losses are unavoidable because energy, especially electricity, cannot be stored in large quantities, the electrification system is highly capital intensive, and that generation plant capacity has a generating limit (Carbonara and Pellegrino, 2018). ...
... 2. Literature review 2.1 Public-private partnership power projects Power is one of the network utilities (together with water, natural gas and rail) that "need a fixed network to supply their services" (Carbonara and Pellegrino, 2018;Agyekum et al., 2022a). To put it another way, the production and distribution of such utilities demand the construction of massive infrastructure across a huge geographic region, with production occurring in a single location and distribution to multiple end-users via an interconnected system . ...
... Given that a public private partnership in the power sector can be viewed as a set of rights, obligations and risk assignments among different project participants, the design of any public private partnership contractual arrangement must consider how public and private partners can price and optimally distribute risks among themselves Olufemi, 2013). To put it another way, when designing public private partnership power contracts, risk management and who is best suited to handle it must be carefully considered (Carbonara and Pellegrino, 2018;Adinyira et al., 2020). ...
Purpose
The purpose of this paper was to first identify and then model the impact of critical success factors (CSFs) of public–private partnership (PPP) power projects.
Design/methodology/approach
Review of empirical literature came out with 20 CSFs which were ranked by experts and industry practitioners through a two-round Delphi questionnaire survey.
Findings
These CSFs were grouped into CSF groups (CSFGs) using component analysis, and they served as the input variables for fuzzy analysis. The six components were collaboration and transparency, guarantee and permits, socio-political support, expected profitability, technical feasibility and risk allocation (RA). Overall success index of PPP power projects in Ghana was 5.966 and showed there is high impact of CSFGs on project success. Fuzzy analysis also confirmed RA as the most significant CSFG.
Originality/value
The model developed can serve as a multi-dimension CSF framework that can be used as a success attainment tool for PPP power projects. For policy developers and stakeholders, the model serves as a pointer to issues which the government/public sector must focus on to attract huge investments from the private sector in the power sector.
... According to literature their adoption is still far from its potential mainly because of two unresolved issues (Carbonara and Pellegrino 2018): i)"the dilemma of equally sharing the benefits between the public and private parties so as assuring a win-win condition, and ii) the lack of adequate public procedures that support the selection of the most appropriate EPC scheme given certain circumstances and projects' characteristics". These authors classify under the EPC contracts umbrella three different contractual agreements: i) Guaranteed savings contracts, in which the ESCO is responsible for the design, implementation and performance of the project but not for its financing; ii) Shared savings contracts, in which the ESCO is responsible for the design, implementation and performance of the project and share an agreed percentage of energy savings with the client, also bearing credit risk; iii) First-out contracts, in which the ESCO is responsible for the design, implementation and performance and retain 100% of the energy savings until the end of the contract. ...
... The third part of the paper, building upon the model proposed by Carbonara and Pellegrino (2018) for assessing and benchmarking the net benefit of the different EPC structures, aims at To test the thesis of this paper a case study is implemented. It refers to the sign of a EPC-PPP contract for building energy efficiency in the health sector. ...
... We use the Carbonara and Pellegrino (2018) model as an interpretative lens to understand which net benefit are gained by each party through EPC contract and to look for the existence of new contractual agreements able to ensure balanced economic benefits for the parties in a long term concession. ...
Sustainable development is one of the key goals of contemporary world society. Without its achievement meeting of the needs of future generations may be endangered. To avoid this, 17 goals of sustainable development were elaborated (Sustainable Development Goals, 2015) that, unlike the millennium goals, are common for both, developed and developing countries and Georgia among them. Georgian government has set all 17 goals of sustainable development as
the national priorities and established indicators for the objectives required for their achievement for years 2020 2025 and 2030. Work for ensuring sustainable development of the country have commenced in Georgia several years ago and there already are certain achievements in the context of stated goals.
... The government encourages the private sector to invest in infrastructure projects in order to reduce financial pressure and improve infrastructure projects' operation and management efficiency through market competition [5]. Therefore, the PPP model has been proposed and become the main method for the private sector to participate in infrastructure construction [6,7]. However, with the rapid promotion of PPP, many problems have been exposed, that are not conducive to its sustainable development [8,9]. ...
... Invite PPP or ABS experts to score the relative importance of indicators according to the scoring standards shown in Table 2 and obtain a judgement matrix. We can then obtain the AHP weights W 1 according to Eq (1) to (6 Step 2: Determine objective weights by entropy method. The data in Table 6 were first standardized according to Eqs (8) and (9), and the normalized matrix X was obtained. ...
Asset-backed securitization (ABS) is currently used to refinance public-private partnership (PPP) projects in the infrastructure field. To stimulate the investors’ enthusiasm, this study evaluated the investment environment of PPP projects asset-backed securitization (PPP-ABS). Firstly, we established a PPP-ABS investment environment evaluation indicator system based on the literature review and the practice of PPP-ABS. Then, the optimal weights of each indicator were determined by the combined weighting of level difference maximization method, where the subjective weights were determined by the AHP method, and the objective weights were determined by the entropy method. Finally, we evaluated the PPP-ABS investment environment from 2015 to 2022 with the technique for order preference by similarity to ideal solution (TOPSIS) method. The final valuation results are consistent with the actual situation. The results showed that the PPP-ABS investment environment exhibits a stable and upward trend. Under the overall guidance of the government, the approval process, information disclosure and supervisory systems have continued to improve, the number of ABS products issued has continued to grow, and the overall market risk is controllable. However, some problems still need to be solved and improved, including inadequate accounting and tax systems, insufficient liquidity in the secondary market, and the recovery of economic development in the post-COVID-19 era. This study fills the research gap in PPP-ABS. It proves the rationality and feasibility of PPP-ABS and is expected to provide a reference for investors’ decision-making and promote the sustainable and healthy development of PPP-ABS.
... The involvement of private companies in the large-scale implementation of AD is of special importance for developing countries, which have limited economic resources for the sustainable disposal of waste, and in most cases, waste management cost is the largest item in a municipality's budget (Norouzi and Dutta, 2022). Moreover, the reduction of available public funds is often challenging in developing countries and WM budgets are often targeted by budget cuts (Carbonara and Pellegrino, 2018). Different WtE business models have been implemented in developed countries to accelerate the growth of the renewable energy sector; these models include build-operate-transfer (BOT), public-private partnership (PPP) and state-owned AD plants (Yan et al., 2020). ...
... Different WtE business models have been implemented in developed countries to accelerate the growth of the renewable energy sector; these models include build-operate-transfer (BOT), public-private partnership (PPP) and state-owned AD plants (Yan et al., 2020). Public Private Partnerships (PPPs) are arrangements between the public sector and private companies where both parties work cooperatively to achieve shared objectives while sharing the investment risk (Carbonara and Pellegrino, 2018). ...
Anaerobic digestion (AD) as a waste management strategy for the organic fraction of municipal waste (OFMSW) has received attention in developed countries for several decades, leading to the development of large-scale plants. In contrast, AD of OFMSW has only recently drawn attention in developing countries. This systematic review was carried out to investigate the implementation of AD to treat the OFMSW in developing countries, focusing on assessing pilot and full-scale AD plants reported in the last ten years. Studies that met the selection criteria were analyzed and data regarding operating parameters, feedstock characteristics, and biogas, digestate, and energy production were extracted. As outlined in this systematic review, AD plants located in developing countries are mostly one-stage mesophilic systems that treat OFMSW via mono-digestion, almost exclusively with the aim of producing electrical energy. Based on the analysis done throughout this systematic review, it was noted that there is a large difference in the maturity level of AD systems between developing and developed countries, mainly due to the economic capacity of developed countries to invest in sustainable waste management systems. However, the number of AD plants reported in scientific papers is significantly lower than the number of installed AD systems. Research articles regarding large-scale implementation of AD to treat OFMSW in developed countries were analyzed and compared with developing countries. This comparison identified practices used in plants in developed countries that could be utilized in the large-scale implementation and success of AD in developing countries. These practices include exploiting potential products with high market-values, forming partnerships with local industries to use industrial wastes as co-substrates, and exploring different biological and physical pretreatment technologies. Additionally, the analysis of capital and operational costs of AD plants showed that costs tend to be higher for developing countries due to their need to import of materials and equipment from developed countries. Technical, economical, and political challenges for the implementation of AD at a large-scale in developing countries are highlighted.
... Martiniello et al. [3] studied the Public-Private Partnerships (PPP)-EPC deals, finding a solution to equally share benefits between public and private actors and to count them as off-balance by Public Administration (PA). Using the model of Carbonara and Pellegrino [4] to assess and benchmark the net benefit of different EPC structures, they found a contract structure that minimizes the difference of Net Present Value (NPV) gained by the contractual parties. Moreover, they tested the above contract structure on an Italian case study in the healthcare sector. ...
... The model used by Carbonara and Pellegrino [4] does not consider the price elasticity effect on the amount of energy savings. If the energy price rises, measures to control the amount of energy usage might be adopted, and the energy cost savings might be less than the estimation carried out. ...
Energy context has been the subject of a great deal of research from different perspectives, including, but not limited to: energy transition, renewable energy, nuclear power, energy saving, energy use, energy level, energy trade, energy security, traction energy, energy communities, energy poverty, Energy Performance Contracting (EPC), climate change, climate policy, and climate sustainability [...]
... Although the EPC market has received substantial global attention, its full potential remains unrealized Carbonara & Pellegrino, 2017). Effective contract structures are essential for aligning stakeholder objectives, balancing risks and benefits, and ultimately realizing a win-win situation (Zhang & Xiang, 2024). ...
The carbon–neutral transition of sewage treatment plants (STPs) is critical for achieving global sustainability goals. However, current STPs confront persistent financial and technical barriers, while Energy Performance Contracting (EPC) projects insufficiently integrate carbon reduction outcomes into their operational frameworks. This study develops a novel benefit allocation framework for carbon–neutral STP-ESCO partnerships by integrating carbon emission reduction metrics into a Rubinstein bargaining game model, which overcomes the “first-mover advantage” limitation in traditional models. Using a real-world STP photovoltaic project as a case study, we quantify the interdependencies between electricity selling prices, internal rates of return (IRR), and benefit distribution ratio. Key findings reveal that: (1) Cooperative feasibility exists only when electricity selling prices and benefit distribution ratios operate within Pareto-optimal thresholds, beyond which negotiations collapse. (2) Higher discount factors (patience levels) significantly reduce sensitivity to counter party parameter fluctuations, enabling stable profit-sharing even under asymmetric bargaining power. (3) Negotiations conclude faster when initial bargaining positions diverge sharply. These results highlight that embedding carbon incentives into EPC contracts and maintaining strategic patience are pivotal for aligning stakeholder interests. The study provides actionable guidance for designing equitable EPC contracts, formulating adaptive negotiation strategies, and advancing policy frameworks that prioritize carbon-inclusive benefit allocation. Its methodology and findings are applicable to other infrastructure sectors pursuing dual objectives of decarbonization and economic viability.
... This shift not only aligns with global sustainability trends but also meets the growing demand from stakeholders for responsible investment practices. Public-Private Partnerships Collaboration between the public and private sectors is essential for scaling up investments in energy-efficient projects (Carbonara & Pellegrino, 2018). Publicprivate partnerships (PPPs) can mobilize resources, share risks, and leverage expertise to implement largescale renewable energy initiatives. ...
Purpose - The analysis evaluates financial technology (Fin-Tech) and green financing effects on energy efficiency in Pakistan while emphasizing their role in developing sustainable growth. The research investigates digital inclusion in finance as well as green bonds and climate-oriented financial tools because of their growing importance in sustainable investments and technological advancements. Study Design/methodology/approach - The analysis relies on time-series data spanning from 2001 until 2023, which researchers obtained from World Development Indicators (WDI). A combination of unit root analysis and correlation analysis, together with ordinary least squares (OLS) regression, serves to evaluate the relationship between Fin-Tech adoption and green financing mechanisms with their effects on energy efficiency. Research data indicates that technological innovations in the financial sector, along with digital payments and blockchain systems, produce major improvements in energy efficiency. The energy-efficient infrastructure and clean energy projects benefit from green financing tools, which include green bonds and sustainable investment funds. Findings - Results from regression analysis show that financial technology development creates positive changes in energy efficiency levels. The energy-efficient financing market has expanded because of financial technology innovations, which include electronic banking systems, blockchain transaction mechanisms, and peer-to-peer credit services. The research supports the Innovation Diffusion Theory because innovation adoption drives financial behavioral changes across all sectors. Research Practical Implications - The analysis faces restrictiveness due to the availability of definitive indicators tailored for Fin-Tech, which hampers potential wide-scale explanation. The research includes only Pakistan, therefore, additional studies must focus on various emerging market contexts. Assessing the Role of Digital Currencies in Green Finance Granting central bank digital currencies (CBDCs) and green cryptocurrencies has increased, so research must evaluate their capacity to support low-carbon investments and enhance energy efficiency projects. Originality/value - The existing literature gains new empirical evidence regarding how Fin-Tech functions together with green financing to enhance energy efficiency through this research. The research connects financial innovation with environmental sustainability while supplying significant directions for developing future sustainable development plans.
... [60,67] Company Status Financial stability, market position, and reputation. [68,69] Green Tariffs & Standards Sustainability and environmental regulations. [32] Despite significant advancements in this field, gaps still exist in the literature. ...
This study examines the factors influencing the selection of supply chain contracts under uncertain conditions. As organizations increasingly face more complex supply chains affected by unstable market conditions and varying demands from stakeholders, the ability to make informed and reliable decisions becomes of paramount importance. This study combines the existing literature from the years 1395 to 1402 in the Iranian calendar (2016-2024 in the Gregorian calendar) and investigates the criteria and sub-criteria for selecting supply chain contracts, highlighting their applications in various industries, including oil and gas.
... При этом действия частного партнера, во-первых, связаны с созданием (модернизацией), эксплуатацией, обслуживанием объекта публичного партнера, который относится к социальной сфере (образовательные, спортивные, медицинские, культурно-досуговые организации; учреждения социального обслуживания и социальной защиты населения и др.), системам уличного освещения и электроэнергетики, жилищнокоммунальному хозяйству и др.; во-вторых, не предполагают получения на объект публичного партнера права собственности; и, в-третьих, могут быть софинансированы из государственного бюджета только на эксплуатационной стадии реализации энергопроекта. В современной литературе можно встретить множество работ, посвященных теории и практике применения энергосервисного контракта в России и в зарубежных странах [4][5][6][7][8][9][10]. Однако следует отметить недостаток специальных исследований развития партнерства государства и бизнеса на основе энергосервисного контракта в условиях современных вызовов и ограничений. ...
Высокий уровень энергосбережения и энергоэффективности способствует снижению энергоемкости ВВП и обеспечению энергетической безопасности страны в целом, в полной мере соответствуя современным требованиям к достижению целей устойчивого развития. В силу этого возрастает интерес к развитию партнерства государства и бизнеса с применением энергосервисного контракта, основанного на реализации частным партнером энергосберегающих мероприятий для достижения экономии энергетических ресурсов. Данное обстоятельство предопределило постановку цели исследования - на основе раскрытия особенностей и анализа развития партнерства государства и бизнеса с применением энергосервисного контракта разработать способы его совершенствования в направлении обеспечения энергосбережения и энергоэффективности в современных российских условиях. Методологическую основу исследования составили общенаучные методы познания экономических процессов и явлений, в частности, анализ, синтез, экспертная оценка и логические методы. Основные результаты исследования сводятся к следующему: определение сущностных признаков, преимуществ, моделей и рисков энергосервисного контракта; представление результатов развития практики применения энергосервисного контракта в современных условиях; выявление российских проблем партнерства государства и бизнеса на основе энергосервисного контракта и предложение мер, направленных на его совершенствование.
... Energy Performance Contracting (EPC) has emerged as a promising approach to improving Energy Efficiency (EE) and reducing greenhouse gas emissions in various sectors [1][2][3][4]. In recent years, the implementation of EPC projects has gained momentum globally, driven by the increasing need to mitigate climate change and reduce energy consumption. ...
Energy Performance Contracting (EPC) represents a promising approach to improving Energy Efficiency (EE) as well as reducing greenhouse gas emissions in various sectors. In the realm of EPC projects, accurate Measurement and Verification (M&V) with regard to energy savings is vital for these initiatives to be successful. Nevertheless, the risks related to M&V in EPC projects were not thoroughly studied. Moreover, the effectiveness with regard to EPC projects depends crucially on the accurate M&V of energy savings, which is often fraught with risks and uncertainties. This paper applied the pre-recording systematic reviews and meta-analysis (PRISMA) approach to finding the primary data based on a few keywords such as “risk or uncertainty, measurement and verification”. Based on advanced searching on SCOPUS and Web of Science (WOS), we found (n=32). Expert scholars decided to develop three themes, which are (1) challenges and issues in M&V, (2) methods of M&V, and (3) risk mitigation strategies in M&V. In summary, this systematic review provides a comprehensive overview of the critical challenges and issues surrounding M&V risks in EPC projects and offers a roadmap for enhancing the reliability and credibility of M&V. By addressing these challenges and implementing the recommended strategies, stakeholders can navigate the complexities of EPC projects more effectively, ultimately advancing the adoption of sustainable energy practices and achieving meaningful environmental and financial benefits.
... Reference [17] emphasizes that partners do not care about the place of the proposed project in the country's energy mix, as they are primarily guided by the cost/profitability dimension. However, this view is one-sided, as it is necessary to consider the impact of the project throughout its duration. ...
The object of the study is public-private partnership projects in green energy in developing countries. The problematics of the study is based on the intersection of the current problems of improving energy efficiency and environmental friendliness of energy innovations. The problem of analyzing such projects was solved with the following results: The findings of the study indicate the importance of country income as a factor influencing investment in public-private partnership projects in green energy. The analysis indicates the importance of the country's income as a factor influencing the established technological structure of public-private partnership projects in the green energy sector. It is proved that energy efficiency significantly depends on the technological structure of public-private partnership projects in green energy. The obtained results are explained by assuming the dependence of public-private partnership projects in green energy on the income level of the economy, based on Wallis one-way analysis of variance and cross-tabulation. Mann-Whitney U test was used to explain the dependence of energy efficiency on the technological structure of such projects. The particularity of this study is the analysis of the technological structure of public-private partnership projects in green energy, taking into account the specifics of developing countries and the application of their clustering. This research is of practical significance in the possibility of applying the results obtained by the authorities for the creation and implementation of public-private partnership projects in the field of green energy, as well as by energy companies implementing new technologies using water, wind and solar energy.
... 10.2.2 Private Sector Involvement: Public-private partnerships (PPPs) can expedite WTE technology deployment by combining regulatory support and financial incentives from the public sector with technological expertise and operational efficiency from the private sector. Additionally, tourism businesses should incorporate WTE projects into their corporate social responsibility (CSR) initiatives, showcasing their commitment to sustainability and community welfare, which can enhance brand reputation and foster customer loyalty (Nunzia Carbonara, 2017). ...
The chapter “Future Trends and Opportunities of Waste-to-Energy Innovations Drive in the Tourism Industry” explores the evolving landscape of waste-to-energy (WTE) technologies and their transformative potential within the tourism sector. With growing environmental concerns and the imperative for sustainable practices, WTE innovations present a viable solution to manage waste while generating energy, thereby enhancing the sustainability and efficiency of tourism operations. Initially, the chapter provides an overview of the current state of WTE in tourism, highlighting existing applications and their impact on the industry. It delves into the advancements in WTE technologies such as anaerobic digestion, gasification, and pyrolysis, and discusses the integration of smart technologies and IoT for optimizing these processes. The discussion extends to the policy and regulatory frameworks that support the adoption of WTE, emphasizing recent trends that favor sustainable tourism practices.
... Other contract types include Build-Operate-Transfer, Leasing, Fuel-Based Contracts (Chauffage), First-In-First-Out, and others. Figure 1 explains the EPC types Carbonara & Pellegrino, 2018;CERtuS n.d.;JRC, 2023;Liu et al., 2017;Qin et al., 2017). ...
Energy Service Companies (ESCO) provide various services to their customers through Energy Performance Contracts (EPCs), including technical support, financial assistance, installation, maintenance, and insurance services. However, emerging risks during this extended process can lead to uncertainties for energy efficiency implementations, ESCOs, and their clients. Understanding of uncertain factors of such energy efficiency applications is therefore crucial. This study aims to evaluate the risks that emerge in the stages of EPC implementations in Türkiye. An expert survey was conducted to assess these risks, with participants consisting of energy managers, representatives from Turkish ESCOs, experts from the financial sector, academics, and decision-makers. Based on the survey responses, the Best–Worst Method (BWM), a multi-criteria decision-making approach, was employed to evaluate the risks in EPCs. Binary comparison vectors, indicating the relative importance of evaluated risk factors, were formulated using the BWM, enabling the calculation of risk weights and the analysis of response consistency. It is revealed that “Financial and Market Risks” is the most important, and “Technological Risks” is the least important risk criterion for EPCs in Türkiye. In the end, policy recommendations were developed to improve EPC applications in Türkiye.
... The other important aspect of identifying and allocating risks in PPP projects is financial risk modeling. The major influences like capital costs, operations & maintenance costs, inflation, and discount rate forge risks for the positive and negative net present values, which could lead to rejection or acceptance of the project [187,188]. ...
Transformation of municipal solid waste into refuse-derived fuel (RDF) offers a promising solution for waste-to-energy conversion. In this context, a systematic literature review and scientometric analysis is conducted showing refinements in RDF application for energy-from-waste (EfW) initiatives, forging a comprehensive approach to sustainable waste management. Key aspects of EfW projects using RDF are examined, focusing on methodologies for calorific value estimation, waste characterization, quality assessment, and public–private partnerships (PPPs). Emphasis is placed on the necessity of accurate energy potential measurement and advanced characterization techniques, including computer vision, for effective waste sorting and analysis. Quality assessments of RDF are highlighted for their impact on decisions within the biomass fuel supply chain, emphasizing the importance of optimizing energy recovery. PPP’s are identified as key to successful execution of EfW projects, with their roles, trends, and risk modeling crucial for fostering effective collaboration between public and private sectors. The study concludes by identifying research gaps, such as the deficiency of new frameworks to support technical assessments of waste processing facilities for strategic, tactical, and operational improvements. Additionally, RDF applications in EfW are limited because of inconsistent waste sorting, deviation from specifications and environmental regulations. This approach aims to enhance sustainable waste management and energy recovery, guiding future research and implementation in the field.
... As observed by Carbonara N. et al. [27] and Martiniello L. et al. [28], in recent years, PPP has met with ever-increasing popularity, and its essential characteristics suggest that it could be an effective operational model for the establishment of a renewable energy community of public nature. They also consider PPP a win-win alternative for implementing projects focused on energy efficiency, as it ensures a beneficial and balanced situation for the main players in energy efficiency projects in the case of energy performance contracting (EPC). ...
The aim of this work is to study possible models for the development of renewable energy communities (RECs) in public private partnership (PPP), aimed at supporting the transition of energy consumption of Italian public administrations towards renewable sources and the sharing of any energy-economic benefits with the community of reference. In particular, the research work analyses the correct balance of interests of the main protagonists of the operation: public concessionary authorities, private Concessionaire and the energy community as the subject that aggregates the interests of the reference community. Moreover, the work aims to highlight the main advantages and risks for each of the actors involved and examine in depth the system of rules and incentives that enhance the actors’ interest in these operations. The economic–financial balance of PPP operations has been investigated in order to quantify the residual economic benefits, after the amortization of the investments and the absorption of management costs. The results highlight that the sustainability of the investments for REC establishment is achieved only under certain conditions with rather modest returns and, in some cases, with the necessity of public capital contributions.
... The market trends and acceptance of Energy Performance Contracting (EPC) have caught the attention of international specialists, especially in energy management fields, in recent years [1][2][3]. Energy Service Companies (ESCO) provide EPC, a service agreement, to Energy Users (EU) in order to improve Energy Efficiency (EE) [4][5][6]. EPC projects are widely acknowledged as among the most efficient global strategies for improving EE [7][8][9]. For example, [10] examines the guarantee-saving scheme among the key EPC project schemes and addresses challenges preventing its widespread use. ...
In recent years, the market trends and acceptance of Energy Performance Contracting (EPC) have caught the attention of international specialists, especially in energy management fields. EPC projects are widely acknowledged as among the most efficient global strategies for improving Energy Efficiency (EE). However, EPC projects are plagued by numerous uncertainties, which increase project risk. The impact of risk factors and categories on EPC projects can influence the effectiveness and success of implementation in EPC projects. This paper applied the pre-recording systematic reviews and meta-analysis (PRISMA) approach to determine the primary data based on a few keywords, such as “risk or uncertainty and Energy Performance Contracting or Energy Performance Contracting project”. Based on advanced searching on SCOPUS and Web of Science (WOS), we found 32 selected articles (n=32). Expert scholars decided to develop three themes, which are (1) risk categories in EPC projects, (2) risk factors and categories in EPC projects, as well as (3) risk assessment methods in EPC projects. Here, the results summarise that the 19 risk factors were obtained and classified into six categories. In addition, risk assessment methods in EPC projects have been summarised. Consequently, the research findings can benefit academics and industrial practitioners in EPC projects.
... The other important aspect of identifying and allocating risks in PPP projects is financial risk modeling. The major influences like capital costs, operations & maintenance costs, inflation, and discount rate forge risks for the positive and negative net present values (NPV), which could lead to rejection or acceptance of the project [39,40]. The underline study is focused on PPP projects in UK and Canada. ...
The Public Private Partnerships (PPP) and the Private Finance Initiative (PFI) have been significantly adopted over the last three decades as a mechanism for the delivery and financing of projects. Various infrastructure project types in the energy and the transport sectors have adopted this procurement system for their ‘anticipated’ effectiveness in risk distribution and value for money. Yet, their acclaimed benefits, particularly in ensuring value for money in the waste to energy – or energy-from-wastes (EfW) – sector are under significant scrutiny. Governments and investors are increasingly questioning their fiscal efficiency and overall benefit to taxpayers. Despite these concerns, studies investigating whether PFI provides value of money of PFI in EfW are lacking. This study addresses this gap by comparing the PFI models used in the UK and Canada in currently operative EfW projects using mixed risk epistemology approach combining methods that provide both a real and objective evaluation of issues and risks and a subjective (or opinion-based) evaluation. The former is achieved through a quantitative probabilistic model for simulating EfW feasibility at the operation phase. The quantitative probabilistic model is capable to model and capture how operational phase costs and profitability are affected by lifecycle risks (such as quality of service driven by contractual requirements that are usually passed on to the Operation and Maintenance (O&M) contractor) and a range of technical, payment and incentive dynamic variables and their fluctuations. If the impact of these variables is not considered and modelled accurately, the O&M contractor could incur significant losses undermining the viability of the EfW project. The latter employs a psychometric methodology to delve into the primary concerns of professionals involved in EfW projects regarding associated risks. The results show that common O&M risks identified in EfW PPP projects in UK and Canada prevail around unplanned maintenance, infeed waste reduction, market price, unsustainable debts, and policy changes.
... Their findings highlight the importance of integrated approaches to reducing environmental impacts, providing valuable context for analyzing the interactions between the economic and environmental aspects of sustainable development. Carbonara and Pellegrino (2018) are exploring public-private partnerships for energy efficiency projects, particularly through Energy Performance Contracting. They argue that such partnerships can be a win-win for both parties, as they help streamline project designs to improve efficiency. ...
The main purpose of the article is to present a modern methodological approach to choosing the most optimal model of administrative and legal planning of public-private partnership in the context of sustainable development of the energy complex, taking into account various aspects, including issues of security and rational resource use. The object of the study is a system of administrative and legal planning public-private partnership models in the context of sustainable development and security of the energy complex. The research methodology involves the use of the method of strategizing of administrative and legal planning for the sustainable development of public-private partnerships, the method of the vector of efficiency of public-private partnerships, as well as the method of game-theoretic modeling. As a result, a methodological approach was formed to strategies of administrative and legal planning for the sustainable development of public-private partnerships in the energy sector. The optimal interaction model between the state and the private sector in this context was selected.
... Interestingly, this claim for the service provider possessing both technical and managerial skills to be able to apply performance-based contracts. These characteristics are similar to the ones already applied by energy service companies, currently offering performance-based contracts leveraging on technical and managerial competences in the energy efficiency market (Carbonara and Pellegrino, 2018;Yi et al., 2017). Therefore, energy service companies could be identified as the proper service provider not only in the energy efficiency market but also in the circular building façade market. ...
... There are different ways to structure an EPC mode with the considerations on different risk allocations between the two parties, provisions of finance, and repayment mechanisms of ESCOs [45]. The key point for designing the new modes is to remove the barriers that are found in applying the traditional EPC modes in rural energy services. ...
Energy performance contracting (EPC) as a market instrument has been effective in promoting energy efficiency worldwide, but it has encountered many insurmountable obstacles in rural energy management. In this study, based on the characteristics of energy management in rural areas, three EPC modes are designed and tested in 24,000 rural households. The test results show that two adapted EPC modes of local government involvement and energy payment directly from the national grid can effectively overcome the barriers encountered in the traditional EPC modes and work well under the economic and social environmental conditions in rural areas. The key to the adaptation of the traditional EPC modes is the introduction of the local government as the third party. Participation of the third party can effectively reduce and remove the barriers and risks and increase the mutual trust between the clients (households) and the energy service companies (ESCOs). Based on the testing results, this study suggests that governmental departments should formulate relevant EPC policies and technical guidelines within the rural context. This research recommends that farmers should not manage their energy services by themselves and it is suggested to out-contracting ESCOs by applying the modes developed and tested by this paper.
... It identified seven dimensions and a contextual perspective of SCF through the review of existing literature. Further, R.Pellegrino et al (2018) contributed to the emerging theoretical argument by applying the real options model to SCF. The model is useful for creating Supply Chain Risk. ...
Purpose: The current research aims at reviewing Supply Chain Finance (SCF) which is an advanced domain of supply chain management receiving extensive attention in research nowadays. Design/Methodology: Comprising an in-depth analysis of different concepts, approaches, and methodologies being used in the domain of SCF, the present evaluation is based on a review of 58 research articles published in the domain of SCF at various times. Comprehensive data regarding the utilization of SCF has been gathered from earlier and more recent studies Findings: The study identifies the areas and domains of supply chain finance which have hitherto received limited attention. The findings show that there is still much left for future researchers to investigate in the area of SCF. Originality: The present review also maps and identifies possible directions for future research. Future researchers may investigate the novel areas identified within SCF. the research provides insights into the supply chain finance field with possible future workings.
... To promote the wide applications of EPC projects, Guo et al. (2019) applied real option analysis (ROA) in an attempt to find the optimal solution that is feasible and profitable for both stakeholders. Carbonara and Pellegrino (2018) proposed a mathematical model to evaluate and label the net benefits of different Energy Performance Contracting structures and provide a 'win-win' solution for governments and ESCOs based on the EPC model. Qian and Guo (2014) develop a model for revenue sharing negotiations between energy organizations (EUs) and energy service companies (ESCOs) under uncertainty in the value of energy performance contracting projects (EPCPs). ...
Distributed energy sharing is an effective means for enterprises to improve energy utilization efficiency and reduce carbon emissions. With the continuous improvement of consumers' low-carbon awareness, low-carbon preference has an important impact on distributed energy sharing strategies. In this context, we introduce the energy saving benefit sharing contract and use the backward induction method to analyze the optimal equilibrium strategies of distributed energy sharing in industrial clusters. Then we conduct a comparative analysis of the equilibrium results. Finally, the above results are analyzed and verified by numerical simulation. The results show that when the ratio of energy low-carbon cost coefficient is within a certain range, energy sharing with integrated energy service providers is the optimal choice for enterprises in industrial clusters, and the centralized decision is better than the decentralized decision; The higher the consumer's low-carbon preference, the higher the product's low-carbon level and total system profitability; As the energy saving benefit sharing ratio increases, the low carbon level of the product and the profit of the integrated energy service provider also increases, and the total profit of the enterprises first increases and then decreases.
... While some scholar had applied simulation technology to establish the energy-saving process model (Ng et al. 2007), Deng et al. established the framework for contract optimization in EPC. From then on, different contract parameters optimization models have been established such as investment (Deng et al. 2015b), contract plan (Carbonara and Pellegrino 2018), risk (Carpino et al. 2022). Simulation technology is developing rapidly. ...
Water saving management contract (WSMC) is an innovative water saving strategy based on market mechanism. As the minimum annual project water-saving revenue agreed with water saving service company (WSSC) and water user, water-saving revenue guarantee (WRG) is one of the key elements in WSMC projects. This paper attempted to establish a model to determine the optimal WRG based on simulation method. First, a nonlinear relationship between water-saving amount and initial investment was built by industry standards. Then, the quantitative influence of water-saving awareness on water-saving amount was built based on Markov chain. Next, a random process with decreasing variance over time was used to describe the fluctuation. Next, the failure maintenance cost in water-saving system was described by renewal function. After that, an unconstraint WRG optimization model of the WSMC was constructed with the WSSC total profit difference net present value (NPV) as the objective function and a solution algorithm was designed. Then, the sensitivity analysis was performed on fluctuation coefficient, estimated model parameters and project original variables. Next, the validities analysis on water-saving revenue and water-saving cost was provided. Finally, a WSMC project case in China was studied and the solutions were compared with traditional model. The results showed that the optimized WRG in this paper was 17% higher than the original one, and the WSSC total profit difference NPV was reduced by about 1200000 yuan. Reducing appropriate initial investment and increasing assistance to water user, like enhancing its water-saving awareness, are efficient methods to improve WRG for WSSC.
... Whilst some may question why a rich country like Saudi Arabia needs to establish such partnership with the private sector, the inclusion of PPPs could be a convenient solution for increasing the quality of public services and cutting the cost impact on the government budget. On the other hand, the private sector usually cannot handle big government projects due to budget constraints and a lack of experience (Carbonara & Pellegrino, 2018). A partnership between the private sector and the public sector could be the bridge that allows the private sector to enter public services investments while allowing the public sector to privatize some of its services, as shown in Figure 11 (Mustafa, 2016). ...
... Decentralization of energy sector investment through public-private partnerships is viewed by its supporters as a major policy option for diversifying and balancing the energy mix to allow for more efficient sources in the grid [6,7]. Increased private sector involvement in energy sector development is expected to break down barriers to the development and implementation of efficient and energy-saving technologies [8]. Access to efficient energy technologies is vital if developing economies are to increase domestic production while consuming less energy and having a lower environmental effect [9,10]. ...
This study draws motivation from the United Nations Sustainable Development Goals (7.8.11), which highlight pertinent issues across the globe, among which are access to energy, responsible consumption, and sustainable development. To this end, we explored the pivotal role of public–private partnerships (PPP) investment in energy in Turkey, which is currently on an aggressive trajectory for its energy mix to energy efficiency. To avoid omitted variable bias in econometric strategies, we controlled for vital macroeconomic indicators such as foreign direct investment (FDI), trade flow, and economic growth. Empirical results showed a long-run equilibrium relationship between the outlined variables as traced by the autoregressive distributed lag (ARDL) bounds test. Subsequently, we observed a positive relationship between public–private partnership (PPP) investment in energy and the country’s energy intensification in both the short and long runs. A similar trend was observed between FDI, GDP growth, and energy intensity. These outcomes have inherent policy caveats for the Turkish energy sector and economic trajectory. Policy implications include efficient investment in clean energy (renewables) as part of Turkey’s effort toward energy intensification to guarantee sustainable development. Additionally, the involvement of PPP is a welcome dimension for sustainable economic growth. Further insights are documented in the concluding remarks.
... The WSMC in China was developed based on contract energy management (EMC), but there are several differences between them in terms of policy, promotion, and the number of projects. As an innovative measure to promote energy conservation mainly by marketoriented means, EMC is quite different from the traditional energy conservation measures mainly supported by financial funds so states and countries around the world have introduced a series of supporting policies for the implementation of EMC projects [14][15][16][17][18][19][20][21][22]. ...
This study analyzed the policies and summarized the current status of the national water-saving management contract (WSMC) development as well as its implementation between 2016 and 2020. Several main problems affecting and restricting the implementation of WSMC projects were identified including the lack of awareness of the importance of water conservation among water users, the limited number and scale of water conservation service enterprises, and the inadequacy of relevant policies and systems. Subsequently, 11 countermeasure suggestions were proposed, including stimulating the endogenous power of the WSMC, strengthening policy support for the WSMC, improving the supporting systems and the service systems, increasing investment and innovation of water conservation technologies, improving technical standards, exploring innovative WSMC models, promoting pilot demonstrations, deepening water price system reforms, increasing the publicity and training of the WSMC, strengthening coordination, and linkage between multiple departments. These suggestions can provide a reference for the relevant departments to develop and promote WSMC policies.
... For example, the Ministry of Finance promulgated Implementation Opinions on Promoting the Standardized Development of Government-Social Capital Cooperation in March 2019. Li et al. considered the selection of private-sector partners is one of the key factors to guarantee the successful implementation of the PPP project [5,6]. Inappropriate partners are the prominent risk factors for PPP projects, which is precisely the most neglected problem [7]. ...
When the government decides to use the public-private partnership (PPP) in projects, such as infrastructure construction, selecting a private-sector partner that meets the project's needs is one of the key factors for successful implementation, but this is ignored in existing research. On this basis, this paper proposes a GRA-VIKOR method based on the combined weight of the improved CRITIC-entropy weight method (EWM). The traditional CRITIC method is improved by combining it with EWM. The combined weights are measured, which reduces the limitations of the single weight. Considering the inherent correlation of evaluation indicators, the VIKOR method is combined with the grey relational analysis (GRA), which makes the results of the selection assessment more reasonable. This paper carries out a case study of the first inland navigation PPP project in China. Through preliminary tracking studies, it tests the effectiveness of the proposed method, the superiority of which is demonstrated by comparing the evaluation results with those of the traditional GRA methods, VIKOR, and TOPSIS.
... Through the EPC model, the energy efficiency service provider designs, pre-finances and implements energy performance improvement solutions [25,26], undertaking the technical risk of actually achieving energy savings [27]. The characteristic feature of this contractual scheme is, in fact, that the remuneration of the ESCO consists of an annual fee, the amount of which depends on the level of savings achieved [28]. ...
The improvement of energy efficiency entails important benefits both for the individual user, owner of the infrastructure, and for the community in general. In fact, Energy Efficiency is a strategic priority of the European Union. However, the great potential deriving from energy efficiency is currently untapped. The reason for this gap is essentially due to the reluctance of customers to commit financial resources for these projects. The EPC scheme allows to overcome this reluctance, offering the customer a wide range of services that exempt him from most of the risks and responsibilities associated with the implementation of the energy efficiency project. Nevertheless, a series of financial barriers hinder the application of EPCs, effectively limiting the use of a sophisticated contractual instrument, which could contribute to the development of the energy efficiency services market. This report examines the opportunity to encourage greater use of EPCs in Italy, using refinancing instruments.
... Table 1 shows the factors of the contract selection (Phase I). [24,25] Flexibility [26,27] Volatility of demand (not fixed demand) [28,29] Uncertainty (change all of the factors that are related to the contract) [30,31] Excess inventory [32,33] Distortion of information [34,35] Responsiveness [36,37] Cost [36,38] Quality [39,40] Organization [41,42] Contracting process [43,44] Project characteristics [45,46] Type of contract [40,47] Organization structure [48,49] Company status [50] Tariff and green standard ...
The oil and gas industry plays a significant role in the economies of many countries today. Due to various factors, including oil price fluctuations, wars, sanctions, and many other instances, selling and supplying these products at low prices is necessary. As a result, the global economy may suffer as well. Supply chain management is one way to reduce the prices of these products. This study was conducted to identify supply chain management contracts in the oil and gas industry. The paper presents an application of multi-criteria decision-making (MCDM) for coping with uncertainty. We contribute to the literature by proposing a new hybrid MCDM method with gray numbers for ranking supply chain management contracts in the oil and gas industry. The results show that the factors for evaluating supply chain management contracts must be selected, and then according to these factors, the supply chain management contracts must be chosen. As a result, we provide our customers with the best deals and help oil and gas companies minimize their costs.
... Some relevant aspects stated in the Directive are related to the possibility of combining energy efficiency interventions with other renovations (such as anti-seismic measures) and the necessity of monitoring. Public-private partnerships (PPP) [14,15], financing opportunities and technical assistance for investment programs are indicated as enabling factors for the development of the renovation program: the target is to improve the efficiency of the European building stock by 32.5% by 2050 [16]. ...
According to the European Union, buildings are responsible for around 40% of CO2 emissions in the EU area. For this reason, the new regulatory framework Clean Energy for All European Package (2019) supports policies to reduce emissions by increasing energy efficiency in buildings. This is the prosecution of a long-standing policy, which in the past has mainly influenced public authorities, but also aggregations of private bodies and the realization (or renovation) of large strategic investments that impacted and changed the fruition of buildings and relevant infrastructures. The paper aims to offer an overview of the European funds dedicated to the Energy Efficiency initiatives in the past few years, distinguishing funds for financing the project itself and funds for the financing of technical assistance. The overview introduces the analysis of a case study related to technical assistance projects in the Energy Efficiency field, i.e., the European Local Energy assistance (ELENA) Fund; findings connected to the case studies are the main contribution of this paper. The analysis helps to interpret the performance of the funds and to detect the gap between the financing procedures and the subsequent operational implementation of the projects. The case study highlighted critical aspects regarding the potential mismatch between the purpose of the fund and operational barriers in the realization of the initiatives. Such evidence can contribute to helping policy makers redesign and correct funding schemes and, moreover, in evaluating them with a complete information set.
... The complex relationship and lack of trust between energy users and ESCOs is an impediment that cannot be ignored in the promotion of the EPC projects in China [8]. The public-private partnership EPC mode is considered to be a win-win energy-saving mode [9]. However, the complex interest relationship between energy users and ESCOs in the green public building EPC project can largely affect the energy-saving efficiency in the operation phase of green public buildings. ...
In the energy performance contracting (EPC) mode, an effective way to achieve green public buildings, the information asymmetry among stakeholders in the operation phase is critically adverse to the energy-saving effect of green public buildings. This paper constructs an evolutionary game model between energy users and energy-saving companies (ESCOs) in the operation phase of green public buildings under the premise of limited rationality. Vensim PLE software is used to build the corresponding simulation model to simulate the strategy evolution of players under different initial strategies. Typical scenarios with different government punishment, penalties from energy users, and opportunistic gains of ESCOs, respectively, are set up to conduct sensitivity analysis. The results show that dynamic alternation exists in the strategy evolution of players during the operation phase of green public buildings under the EPC mode, and it is influenced by the simulation period and players’ initial strategies. And the evolution in different typical scenarios is influenced by the aforementioned parameters with different significance. This study can provide a basis for the supervision strategy of ESCOs in the operation phase of green public buildings by local governments and energy users thus promoting the energy-saving operation of green public buildings for final carbon reduction.
... It is important to note that power, transmission and distribution losses are unavoidable because energy, especially electricity, cannot be stored in large quantities, the electrification system is highly capital intensive and that generation plant capacity has a generating limit (Carbonara and Pellegrino, 2018). Because of the system's features, short-term solutions and an emphasis on expanding energy infrastructure are insufficient to address any potential issues. ...
Purpose
This paper aims to evaluate the risk factors and determines the overall risk level (ORL) of public-private-partnership (PPP) power projects in Ghana using fuzzy synthetic evaluation methodology (FSEM).
Design/methodology/approach
In this paper review of literature led to the development of a 67-factor risk list which was ranked by experts and industry practitioners through a questionnaire survey.
Findings
These factors were grouped into principal risk factors (PRFs) using component analysis and they served as the input variables for fuzzy analysis. The seven components were: Contract and Payment risks, Environmental risks, Financial and Cost risks, Legal and Guarantee risks, Operation risks, Socio-Political and Performance risks (SPR) and Tender and Negotiation risks. Study showed that the ORL of Ghanaian PPP power projects is high implying they are risky to both the public and private sectors. Fuzzy analysis also confirmed SPR as the most critical principal factor.
Originality/value
This study is significant and demonstrates that fuzzy methodology can be used as a useful risk evaluation tool and risk assessment framework for private investors, policy makers and public sector.
Methodology: Our study used a Panel Vector Autoregressive (PVAR) model to examine the relationship between public-private partnerships (PPPs) in energy (PPPE) and green logistics management (GLM) across 38 countries from 2010 to 2022.
Purpose: The globe is facing major problems in the fields of environmental, social, and economic issues. Under this circumstance, green logistics activities aim to reduce carbon emissions and enhance the ecological impacts of supply chain activities on the path toward the green economy transition. Public-private partnerships (PPPs) in energy are increasingly recognized as critical to achieving sustainable logistics, particularly in balancing environmental sustainability with trade. This study investigates the dynamic relationship between PPPs in energy and green logistics.
Findings: Our findings show that green logistics has a significant positive impact on PPP investments in energy in the short term, enhancing the efficiency of energy infrastructure projects. However, this effect diminishes over time as long-term infrastructural and logistical challenges, particularly in developing countries, limit the sustained impact of green logistics. The study emphasizes the need for comprehensive policies that promote green logistics while addressing these long-term challenges to ensure sustainable energy transitions.
Originality: Determining whether PPPE is directly or indirectly responsible for GLM activities could lead to various theoretical advancements. It makes obvious if the way GLM frameworks are assessed has an impact on the contradictory and ambiguous practical findings of earlier investigations. Our paper contributes to the literature by providing a theoretical link and empirical evidence on the PPPE-GLM nexus. In this work, we apply a variety of statistical techniques to a global database covering the years 2006–2022. In this study, tests confirming the cross-sectional dependency of our dataset are regularly followed by the use of the panel vector autoregression (PVAR) model.
Purpose: This paper analyses the functioning of a solar panel system at King Hamad University Hospital (KHUH), indicating its part in enhancing sustainability and cost-efficiency. Due to the increasing demand in renewable energy, this study illustrates how healthcare facilities can minimize operational costs using solar energy. Methodology: The study details the integration of solar panels into KHUH’s infrastructure, importance their potential for energy generation. It encompasses a methodical investigation of the project's technical, economic, and environmental scope, aligning with the hospital's commitment to responsible resource management. Findings: The study reveals that KHUH's implementation of solar panels much reduces electricity payment, in this manner present substantial cost savings. It also enhances the hospital's energy safety and leads to an important reduction in greenhouse gas emissions, reflecting its commitment to environmental impacts. Originality: This paper's originality lies in its determined inspection of solar panel integration in a hospital, underlining in cooperation economic and environmental profit. It contributes to the role of renewable energy in healthcare, showcasing KHUH's original role in sustainable and efficient resource management in the medical sector.
This article considers a two-echelon supply chain consisting of one large-size supplier and one small-size manufacturer. The supplier wholesales raw materials to the manufacturer who processes them into final products and sells them to consumers. The supplier also engages in Cournot competition with the manufacturer by producing its product and direct selling to consumers. In addition, as an energy service company, the supplier may choose low-carbon production for its product and may help the manufacturer to achieve low-carbon production by providing energy performance contracting services to the manufacturer. We investigate whom the supplier should provide energy performance contracting services to and analyze the impact of the unit matching cost and the investment cost coefficient in implementing the energy performance contracting project on the optimal decisions and profits for the two members. The results show that when the investment cost coefficient is not high, the supplier prefers to provide energy performance contracting services to the manufacturer under a low matching cost and to the two members under a high matching cost. However, the manufacturer prefers to enjoy energy performance contracting services for itself regardless of the matching cost. With the increasing investment cost coefficient, the supplier changes the decision to prefer to provide energy performance contracting services for itself. In such case, the manufacturer also prefers to not accept energy performance contracting services, so the two supply chain members’ profits are highest.
“How would the global socio-economic scenario be today if the economy took as an example the scientific models of learning, dialogue and co-certification of astrophysics?”. The space-time journey started from one question and it has led to the first ‘interstellar guide for a new dimension of energy’, aiming to create innovative solutions for the future, for holistic sustainability including the environment, the economy and the entire society. A journey that brings together many subjects, from art in its various forms to science, economics, sociology, and engineering, thus confirming an important paradigm: modernity requires solutions originating from multiple fields, from an inter- and multi-disciplinary or even more ‘anti-disciplinary’ approach. Along the ride is the constant presence of Albert Einstein and his wise advice, “we cannot solve our problems with the same thinking we used when we created them”. Therefore, the book, written by twelve young Ca’ Foscari graduates (six women and six men), brings together twelve topics and focuses on relevant current issues: the environment, economy and sociality. How? By talking about Keynesian multiplier, startups, scaleups and unicorns, fintech and finance, equity crowfunding, social networking as an educational tool for sustainability, sustainability as added value, evolution from Energy Service Company to Energy Social Company, the new professional roles of the Energy and the Sustainability Manager, energy communities and smart grid, Energy Efficiency, enabling technologies and innovative business models, and renewable energy sources. The mission of the book is to share a method, the Y method, that Infinityhub applies in implementing energy efficiency projects that educate on sustainability with an extraordinary result: all participants win and the benefit extends from the environment to the economy to society as a whole. Human intelligence, that precious ability to investigate things, allows us to design a new future, realising that ‘everything is linked’ and ‘we can only go upward by going toward each other’, that ‘energy results by multiplying the mass (us) for enlightenment’. This book paves the way and it is up to us to walk it together, starting with words in order to achieve works.
“How would the global socio-economic scenario be today if the economy took as an example the scientific models of learning, dialogue and co-certification of astrophysics?”. The space-time journey started from one question and it has led to the first ‘interstellar guide for a new dimension of energy’, aiming to create innovative solutions for the future, for holistic sustainability including the environment, the economy and the entire society. A journey that brings together many subjects, from art in its various forms to science, economics, sociology, and engineering, thus confirming an important paradigm: modernity requires solutions originating from multiple fields, from an inter- and multi-disciplinary or even more ‘anti-disciplinary’ approach. Along the ride is the constant presence of Albert Einstein and his wise advice, “we cannot solve our problems with the same thinking we used when we created them”. Therefore, the book, written by twelve young Ca’ Foscari graduates (six women and six men), brings together twelve topics and focuses on relevant current issues: the environment, economy and sociality. How? By talking about Keynesian multiplier, startups, scaleups and unicorns, fintech and finance, equity crowfunding, social networking as an educational tool for sustainability, sustainability as added value, evolution from Energy Service Company to Energy Social Company, the new professional roles of the Energy and the Sustainability Manager, energy communities and smart grid, Energy Efficiency, enabling technologies and innovative business models, and renewable energy sources. The mission of the book is to share a method, the Y method, that Infinityhub applies in implementing energy efficiency projects that educate on sustainability with an extraordinary result: all participants win and the benefit extends from the environment to the economy to society as a whole. Human intelligence, that precious ability to investigate things, allows us to design a new future, realising that ‘everything is linked’ and ‘we can only go upward by going toward each other’, that ‘energy results by multiplying the mass (us) for enlightenment’. This book paves the way and it is up to us to walk it together, starting with words in order to achieve works.
Purpose – With the continuous improvement of public–private partnership (PPP) projects, the participants’ value creation goals are not only limited to achieving the basic performance objectives but also to realising value added. However, the effect of traditional contract management on realising the value creation objectives of PPP projects is limited. According to the view of multifunctional contract, joint-contract functions that integrate contract control and flexibility are likely to be effective in enhancing the value creation of PPP projects. This study aims to explore the effects of joint-contract functions on PPP project value creation and relevant influencing mechanism by investigating the mediating effect of in-role behaviour and extra-role behaviour.
Design/methodology/approach – After collecting 258 valid questionnaires from PPP professionals in China, this study used structural equation modelling to validate the hypotheses.
Findings – Contract control and flexibility can improve PPP project value creation. Specifically, contract control improves the achievement of the basic contract objectives of PPP projects, whereas contract flexibility enhances the achievement of the value added of PPP projects. Moreover, only in-role behaviour mediates the effect of contract control on value creation. In addition, the mediating effect of extra-role behaviour on the impact of contract flexibility on value creation is stronger than that of in-role behaviour. The mediating effect of in- and extra-role behaviour is mainly reflected in the realisation of basic and value-added performance, respectively.
Research implications – The findings of this study can help realise value creation in three ways. Firstly, new perspectives for PPP project value creation should be proposed by combining the improvement of contract objectives and the realisation of the participants’ implicit demands. Secondly, the effects of different contract functions on value creation should be analysed instead of a single dimension of contractual governance. Thirdly, the mediating effects of different types of cooperation behaviour that may influence the relationship between contractual governance and value creation should be evaluated.
Originality/value – This study verifies the impacts of different contract functions on PPP project value creation. In addition, cooperative behaviour is embedded as a mediating variable, and the mediated transmission path from contract function to cooperative behaviour and further to PPP project value creation is systematically analysed.
The effects of climate change, in combination with the recent energy crisis, have brought the energy efficiency issues of hospitals markedly to the fore. Hospitals are considered among the most energy-intensive buildings, which is why they have become a top priority for governments wishing to upgrade their energy efficiency. Given the critical nature of the work of hospitals and the model of healthcare provision (nursing cover 24 h per day, 7 days a week) it is very hard to achieve energy cuts. The international literature shows that the energy efficiency of hospitals is a complex process that requires further research. This need is covered by the present systematic literature review, which captures the existing knowledge on energy monitoring strategies, assessment, and upgrading through technology, resources-saving strategies, and the relationship between energy efficiency and the quality of the service provision, while also identifying future research considerations and the potential for supporting researchers’ work. Additionally, this study adds aggregated data to the literature, as far as the energy performance of buildings is concerned, and allows investors to have data exported from energy surveys at their disposal. At the same time, it suggests the further exploration of alternative energy technologies, based on all renewable energy sources rather than only solar power systems. This highlights the need for a comparative examination of hospitals with different climatic and socio-economic environments, to better determine what technologies effectively serve the energy needs of each region. Finally, this survey considers it necessary to connect the energy efficiency of hospital units with the awareness of the management and workforce in the saving of energy resources. Due to the fact that most studies are oriented toward the energy performance of very large-sized hospitals, it is suggested that in the future, the research lens should also be focused on the smaller private and public sectors’ health units.
Purpose
This study aims to identify the critical success factors of public private partnership (PPP) power projects in Ghana and further evaluates the most significant critical success factors (CSFs) influencing both the public and private sector participation in PPP power projects.
Design/methodology/approach
Ranking-type Delphi survey in two rounds was conducted to establish a comprehensive list of critical success factors of PPP power projects. Using purposive and snowball sampling techniques, experts were targeted for the Delphi survey. Mean score ranking, Cronbach’s alpha coefficient and Kendall’s concordance were used for analysis.
Findings
From the list of 37 critical success factors, 9 CSFs were deemed to be extremely significant. The five topmost CSFs were as follows: shared authority, trust and communication between public and private sectors; necessity of power project; debt guarantee to enable private partner to raise funds from the local or international financial markets; appropriate risk allocation and risk sharing; and thorough and realistic assessment of cost, projections and benefits.
Originality/value
The CSFs identified and prioritized in this study have the propensity to trigger policy development towards the PPP power sector in Ghana and developing countries that shares similar context. This is because the study has wide implications for financing, politics, procurement, regulations, legal and capacity building.
Trust relationships can improve performance of public–private partnership projects, but current research often starts from a dual perspective of project owner and contractor. Since there are many stakeholders in each project, it is more reasonable to consider the network structure of trust relationships from the perspective of social network theory. Given the lack of research in this area, a study was undertaken to reveal the relationship between trust network, opportunistic behaviours and project performance among all participants in public–private partnership projects. Partial least squares structural equation modelling was used to analyse the data from 193 valid questionnaires. It was found that the density and stability of trust networks were negatively correlated with opportunistic behaviour, and positively correlated with project performance. However, the centralisation of networks was positively correlated with opportunistic behaviour and negatively correlated with project performance. These conclusions are helpful in optimising public–private partnership project performance from the perspective of stakeholder management and trust network governance.
Infrastructure projects are characterized by long maturity and high capital investments.
These projects present uncertainties that impact the economic and financial viability.
Traditional methods of valuation fail to capture managerial flexibilities that add value to
such projects. It becomes relevant to use optimization methods under uncertainty, which
complement the traditional analysis. In this study a model was developed for decision
making of expansion of a container port terminal in Brazil. In addition to providing a
broader view of the port sector in Brazil, its contribution is the development of a flexible
option pricing model, which can be adapted to other infrastructure project modeling,
allowing the optimal expansion exercise.
In this paper, we design and evaluate the feasibility of a system which minimizes residential electricity cost of
individual homes by shifting demand over a daily forecast price cycle. Ideally, our system will accept use-time preferences from consumers and optimize their appliances’ operation around those given patterns. However, using the system to recommend optimum use-times to consumers is also possible by accepting ideal use
preferences from an external load manager and computing the cost savings of these preferences relative to the cost of the consumer’s current use patterns.
We implement the optimization problem in two stages by using Mixed Integer Linear Programming (MILP). In the first stage, we obtain the optimum scheduling for appliances to be connected to the outlet; the output of this stage only shows the hours that we can use the appliance and does not reflect the actual consumption hours of each appliance. In the second stage, we model the random behavior of users via Monte Carlo simulation by running the appliances within the times they receive power, specified in the first stage. Finally, we evaluate the effectiveness of the proposed model in terms of cost savings by considering three appliances and four pricing schemes.
Product-Service Systems (PSSs) constitute a family of service-based business models designed to satisfy our societal needs in an economically and environmentally sustainable manner. To date however PSS application has remained niche due to a variety of critical barriers. This paper explores how ‘demand pull’ national government policies could support PSS activity by addressing these barriers and cultivating market demand. Lessons are drawn from a case study of how regulatory, economic incentive, informative and procurement policies have supported Energy Service Company (ESCo) activity in the UK; a sub-set of the PSS family focused on energy service provision. Subsequently five policy recommendations are presented to support PSS activity: (1) balancing economic incentives and regulatory disincentives; (2) promoting indirect policy support; (3) redesigning existing market structures; (4) promoting locally-led PSS activity; and (5) creating stable policy frameworks. The paper warns however that national government policy cannot easily address all PSS barriers, such as customer preferences, international developments, technological progress and inherent business model weaknesses, pointing to the need for other complementary solutions. Furthermore, other governance actors beside national government could also implement PSS supporting policies.
In smart grid, customers have access to the electricity
consumption and the price data via smart meters; thus, they
are able to participate in the demand response (DR) programs.
In this paper, we address the interaction among multiple utility
companies and multiple customers in smart grid by modeling
the DR problem as two noncooperative games: the supplier and
customer side games. In the first game, supply function bidding
mechanism is employed to model the utility companies’ profit
maximization problem. In the proposed mechanism, the utility
companies submit their bids to the data center, where the electricity
price is computed and is sent to the customers. In the
second game, the price anticipating customers determine optimal
shiftable load profile to maximize their daily payoff. The existence
and uniqueness of the Nash equilibrium in the mentioned
games are studied and a computationally tractable distributed
algorithm is designed to determine the equilibrium. Simulation
results demonstrate the superior performance of the proposed
DR method in increasing the utility companies’ profit and customers’
payoff, as well as in reducing the peak-to-average ratio in
the aggregate load demand. Finally, the algorithm performance
is compared with a DR method in the literature to demonstrate
the similarities and differences.
Sustainable building has become a future development trend in the building sector. Building Energy Efficiency Retrofit (BEER) provides excellent opportunities to reduce energy consumption in existing buildings, and to promote environmental protection, the rational use of resources, occupants' health, all of which helps to improve the sustainability of existing buildings. Energy Performance Contracting (EPC) provided by Energy Service Companies (ESCOs) is a market mechanism to provide financial and technological support for energy efficiency projects. This paper aims to develop a sustainability promotion framework for BEER projects under the EPC mechanism to link the sustainable performance of BEER with the success factors of this EPC mechanism. Different types of building have different energy consumption characteristics. This research focuses on hotel buildings in China. The paper develops a framework for sustainable BEER through an EPC mechanism in hotel buildings based on the EFQM Excellence Model for business quality management. Interviews were conducted with experts from the hotel industry, from energy service companies and with academics. Based on the developed framework, the study has identified 11 performance indicators for sustainable BEER and 28 success factors of an EPC mechanism. This provides significant groundwork for future study in developing an assessment model to evaluate the sustainability of BEER projects.
Public-private partnerships (PPPs) are adopted throughout the world for delivering public infrastructure. Despite the attractiveness of the PPP structure, its implementation has not been without trouble due to multiple uncertainties embedded with PPP projects. Private investors often require some mitigation of these risks through government support. One of the most common forms of government support is minimum revenue guarantee (MRG). A real option-based model is developed that uses a new mechanism for setting the revenue guarantee level secured by the government, which balances the private sector’s profitability needs and the public sector’s fiscal management interests and uses the concept of fairness for structuring MRGs. The model uses Monte Carlo simulation to take into account the uncertainty. The model is applied to the projected 1 kilometre long ‘Camionale di Bari’ toll road that will link the port of Bari (located in Puglia, Southern Italy) with the existing road network without affecting the urban traffic. It was found that government support is often needed to make the project attractive to private investors and that the developed model can be, for both public and private sectors, a valid tool for defining the fair value of the minimum amount of revenue secured by the government.
Considering the growing awareness about energy and environment, the demand for a reliable and sustainable power grid and also the need for high quality resources leads to the evolution of Smart Grid (SG) as a novel means to worldwide electricity distribution.
Public Private Partnership (PPP) is adopted throughout the world for delivering public infrastructure. Despite the worldwide experience has shown that PPP can provide a variety of benefits to the government, to fully gain them several critical aspects related to a PPP project need to be managed, among these the determination of the concession period.
This paper provides a methodology to calculate the concession period as the best instant of time that creates a ‘win–win’ solution for both the concessionaire and the government and allows for a fair risk sharing between the two parties. In other words, the concession period is able to satisfy the private and the government by guaranteeing for both parties a minimum profit, and, at the same time, to fairly allocate risks between parties. In order to take into account the uncertainty that affects the PPP projects, the Monte Carlo simulation was used. To demonstrate the applicability of the proposed model, a Build–Operate–Transfer (BOT) port project in Italy has been used as case study.
Energy Service Companies have faced strong expectations to capitalise on large but untapped energy-efficiency opportunities, but have fallen short in terms of diffusion. This paper focuses on the viability of a business model based on Energy Performance Contracting. Following a two-round Delphi study conducted in Finland, we analyse the insights provided by the experts through the Hamel business model framework. The main aim is to increase understanding of the model that Energy Service Companies use, and to identify the main factors that hinder their business development. The findings suggest that rather little is known about these companies and their service offerings. The uncertainty surrounding the business affects the customers' readiness to invest their time and resources in the projects. One of the key development needs for the business is thus to put a strong emphasis on both the visible and the invisible benefits.
This book reviews the reasons for the success or failure of a range
of recent energy efficiency programs in developing countries and
economies in transition. It also draws heavily on an intensive program
to exchange ideas and operational lessons learned in energy efficiency
projects in Brazil, China, and India, undertaken during 2002–06 with
funding from the United Nations Foundation. The book attempts to
synthesize lessons learned from the many practical experiences shared
by scores of seasoned professionals working on energy efficiency in
these three large developing countries and the thoughts of these
practitioners on how to overcome the obstacles faced.
The book goes beyond those experiences to review lessons learned
in various energy efficiency programs in recent years, especially by the
World Bank. Part II of the book presents 13 case studies of specific
energy efficiency investment delivery mechanisms implemented in
eight different countries. One of the recurring themes of the book is
that effective delivery of energy efficiency investments is essentially
an institutional development challenge. As such, attempted solutions
must fi t within prevailing local economic institutional contexts, which
vary dramatically. Where initiatives have been most successful, they
have been built following careful, in-country diagnostic work, with
parallel attention to both financial intermediation and technical
support requirements and with flexibility to make many adjustments
along the way.
Energy performance contracting is a financing technique that raises money for investments in energy efficiency that is based on future savings. It enables money that will be saved as a result of introducing a new energy-efficient measure to be used to offset the cost of financing, installing and operating that measure. In recent years, the technique was being introduced and implemented in some buildings in Hong Kong. Although it has the potential to help reduce energy costs and improve existing facilities, the take-on rate remains low at present. This paper explains the basic concepts of energy performance contracting and discusses the opportunities and challenges of it to improve the performance of existing buildings in Hong Kong. The key factors and market potential for developing the EPC technique are described. The barriers and challenges affecting its development are examined. It is found that Hong Kong has good opportunities for applying energy performance contracting but some market and institutional barriers are limiting its application at present. The important considerations for implementing the technique are discussed.
The European Energy Service Companies' (ESCOs) market has been estimated to be 150 million Euro per annum in 2000, while the market potential has been estimated to be 5 to 10 billion Euro per annum. This indicates that there is a great potential to increase the ESCOs' activities in the European Union (EU). Moreover there is a big difference in ESCOs' activities among EU Member States. The Commission has promoted a number of policy initiatives to foster the development of the ESCO industry, including a specific article in the SAVE Directive (1993/76) and a model contract for Third Party Financing (TPF). Recently through the GreenLight Programme, the Commission has established the first European list of ESCOs. From the listed ESCOs it emerges that the definitions, roles and activities of "ESCOs" vary a lot, and only a limited number of ESCOs have the capability and willingness to finance the energy efficiency projects and receive payments exclusively from the resulting cost savings.
Although the European Commission and the Member States of the European Union (EU)1 have promoted a number of policy initiatives to foster the Energy Services Company (ESCO) industry, a recent survey of ESCO businesses in Europe has indicated that major differences exist in the development of the ESCO business among the various countries. In some countries a large number of ESCOs have been successfully operating for a number of years, while in other countries only a few ESCOs have recently started to operate. This difference could be explained by several factors, such as different levels of support offered to ESCOs by national and regional energy authorities, local market structures and rules, and variation in the definitions, roles and activities of ESCOs. This paper reviews and analyses the development and the current status of ESCO industries in the EU and the New Accession Countries. Based on the review and the analysis, a long-term strategy to foster the development of ESCOs in Europe is formulated. The strategic actions recommended build on successful experience in Europe and are proposed with an eye to existing and planned legislative measures, such as the proposed Energy Service Directive and the deployment of the Kyoto flexible mechanisms.
Energy service companies (ESCOs) are expected to play an important role in promoting energy efficiency in countries outside of the US. However, there have been no studies examining the current level of ESCO activity internationally. To correct for this deficiency, a survey was conducted in the Fall of 2002 to collect information on the following key topics for selected countries: (1) the number of ESCOs; (2) the key sectors targeted by ESCOs; (3) the four most important barriers facing the ESCO industry; (4) the approximate value of projects conducted by ESCOs in 2001; and (5) the future of the ESCO industry in that particular country.Information was collected on ESCO activity in 38 countries outside of the United States. Based on the survey data, we calculate the total amount of ESCO activity outside the US in 2001 to be between 620 million. This is approximately one-half to one-third of the ESCO revenues in the US for 2001.
In many countries, limitations upon the public funds available for infrastructure have led governments to invite private sector entities to enter into long-term contractual agreements for the financing, construction and/or operation of capital intensive projects. For the public procurer, there is an obvious need to ensure that value-for-money has been achieved. To the project sponsors, such ventures are characterised by low equity in the project vehicle and a reliance on direct revenues to cover operating and capital costs, and service debt finance provided by banks and other financiers. Risk evaluation is complex, requiring the analysis of risk from the different perspectives of the public and private sector entities. This paper analyses the principles involved, drawing on practical experience of evaluating such projects to present a framework for assessing the risks, and using as illustration a case study of a waste water treatment facility in Scotland which is typical of most PPP projects.
Investment under the private finance initiative costs more than public sector procurement. The annual charge for the use of privately financed facilities is between 9.1% and 18% of the original construction cost, whereas as government can borrow at interest rates of 3.0% to 3.5%. The extra cost of private finance is disguised by the Treasury's insistence that NHS trusts discount costs at 6% per annum when comparing the costs of the private finance option with public sector investment. The amount of risk transferred to the private sector under privately financed deals has been exaggerated, leading to spurious attributions of additional value to private sector options.
Educational sector is growing drastically as a result of upward trend of population. These schools require tremendous quantities of energy units to be generated and consumed. As a result, this will impact negatively on the environment by increasing the carbon emissions and depletion of non-renewable energy resources. Moreover, the harsh climate condition contributes substantially to increase the energy consumption in various weather zones in the world. Therefore, several energy efficiency plans have been developed to improve the energy performance of the schools facilities globally. Hence, this paper discusses the energy management program as a sustainable strategy that applicable on the schools. This program is designed for the schools to improve the energy efficiency, indoor environmental quality and adopting the best management practices during the operating stages. This research has developed a customized energy management program for one of the schools in UAE. It has concluded the findings by using computerized hourly thermal modeling. The energy model has evaluated the proposed energy conservation measures and the best practices that were generated by the energy management program steps. This case shows that the energy performance could be improved substantially by 35%. Thus, the energy use index of the audited school that adopted the energy management program has reduced from 438 kWh/m2/year to 285 kWh/m2/year. The proposed energy management program has been articulated in this study as a consecutive and linear progression. This methodology presents several steps to mitigate the carbon emission by addressing the sustainability dimensions; economic, environment and social aspects. This study discusses the steps and the work flow of developing the energy management program and the anticipated outcomes for the school's buildings. The program considers practical ECMs along with the students and teachers participation and interaction. Furthermore, it highlights the success criteria that assure the sustainability of the energy efficiency at the operating life cycle of school's facilities.
There is a growing interest in a sustainable built environment and green technologies are gaining worldwide attention. However, implementing green technologies usually requires more investment than using traditional technologies and the payback period tends to be very long. In China, most developers sell their properties and subsequently transfer the ownership to customers. Hence, a crucial problem for promoting green construction is that developers cannot obtain economic profits (“gold”) from implementing “green” technologies. Meanwhile, other stakeholders, such as property management companies, are also hesitant to adopt green technologies because of the large investment involved and their lack of experience. To tackle this problem, an energy performance contracting (EPC) based framework is proposed, to turn “green” investment into “gold” benefit by careful sharing of the risks existed. The framework was developed by conducting a focus group meeting with three experienced representatives from developer, property management company and energy service company respectively. A real-life case study, which includes both energy efficient system retrofit and new construction, is used to estimate the costs and benefits involved to demonstrate and verify the conceptual framework. The results show that the proposed framework can support the application of green technologies in both types of projects. Economic benefits as well as environmental benefits can be gained for the project stakeholders and the whole society.
Associated with the rapid economic growth, last decades have witnessed significant increases of both energy production and energy consumption in China. It is also recognized that the air pollutants emissions brought by excessive fossil energy consumptions have caused serious environmental problems. It is imperative to save energy and reduce emissions in China. As an innovative market mechanism, Energy Performance Contracting (EPC) can effectively reduce the energy consumption. China has released a series of laws, polices, regulations, and plans that include EPC related contents. Due to the massive demand as well as the facilitation efforts from the governments, EPC has developed rapidly in China. For instance, the number of employees, the aggregate investment, and the total output value of energy service companies increased by 31.8 times, 56 times and 73.2 times between 2005 and 2013. The evolution of policy system of EPC in China is examined in this study. The results show that legal protection, policy guidance and fiscal incentives are main measures to promote the development of EPC. These policies showcase China's efforts on achieving energy conservation, enhancing energy efficiency and improving environmental performance by encouraging the implementation of EPC. However, the analysis also reveals some existing issues. Further development of EPC depends on a number of factors such as a complete legal security system, a mature market mechanism, flexible economic incentives and the specific development plan for EPC. The experiences gained in China are helpful for promoting the development of EPC industry, especially in the developing countries.
Many energy efficiency professionals have proposed using Energy Performance Contracts (EPCs) as a mechanism to improve public sector energy efficiency in countries with restrictive government budgets. However, in practice, most middle-income countries have used this mechanism only in a limited way. Russia offers an interesting case study because of its huge energy savings opportunities, increasing energy prices, robust political backing for public sector energy efficiency, and evolving legislation that supports EPCs. In 2009, the Russian Federation initiated reductions in the country’s energy intensity, including of the large public sector, which accounts for 9 percent of Russia’s total energy consumption. To achieve energy efficiency goals in the public sector, Russia experimented with its public procurement rules, adjusting them to encourage EPCs. We reviewed the Russian government’s official public database, conducted structured interviews with Energy Service Companies (ESCOs) in Russia and supplemented them with online research. Even though this process might not have captured all of the EPCs signed in Russia as of mid-2013, we estimate that nearly 50 ESCOs signed about 150 contracts in public facilities. Most ESCO contracts in Russia are for 5 years, and they generally are small (under $100,000). ESCOs in Russia face a challenging environment, which leads to smaller projects. ESCOs also are concerned about costly and risky tender procedures, uncertainty regarding repayment from public facilities, the inability to expand projects, and financing. We discuss these challenges and propose potential solutions at policy and company levels. The ESCOs feedback regarding Russia’s experimental model can inform the country’s program for public sector energy efficiency and offer lessons for other countries attempting to develop the EPC mechanism.
The full development of the energy services company (ESCO) industry is still inhibited by the difficulties during the negotiation between customers and ESCOs. Contractual arrangements are traditionally based on energy performance contracting (EPC). Improvements on EPC schemes are required in order to achieve the success of the negotiation. This work focuses on a particular type of EPC, named guaranteed savings (GS) contract, where a minimum energy saving is guaranteed to the customer by the ESCO. A model based on real options theory to share risks among contractual parties is proposed in order to estimate the fair value of main contractual parameters. A Monte Carlo simulation is adopted for evaluating the most critical factors influencing the overall risk sharing. A numerical example concerning a cogeneration plant of a paper mill is presented. A two level full factorial design of experiments (DOE) analysis is carried out in order to estimate single and compound effects of model parameters.
This manuscript summarises the results of a project concerning the energy consumption of public buildings and utilities and the evaluation of the most effective and feasible ways to save energy in Certaldo, a small township in Tuscany with approximately 16,000 inhabitants. The energy analysis highlighted a specific partitioning of electric and thermal energy for final use. For example, more than 60% of the electricity consumption of the town is for street lighting, which is still uses obsolete and environmentally problematic lighting technologies, and more than 13% for lighting public schools. With respect to heat utilities, more than 60% of natural gas consumption is for heating public schools and 18% is for heating sport/athletic facilities. The partitioning of energy consumption introduced a list of requalification measures focused on specific areas: each area has an energy saving potential and specific feasible energy requalification technologies in addition to the possible introduction of suitable renewables. The selection of the proposed interventions was based on the results of model simulations, municipal urban regulations and prevailing trends resulting from a survey of municipalities that are the same size as Tuscany. The type and impact of these interventions were also in agreement with the trends found in different international contexts.
Scope and method of study. This subject matter is focused on the economic justification for energy management projects which involve both an energy client and an energy service company (ESCO) (and possibly other parties) in an Energy Savings Performance Contracting (ESPC) project. In this research, an analysis model is developed which includes multi-party involvement in justifying energy management projects that require expertise and capital beyond that found in the energy client. Examples include energy generation from waste heat, solar applications, and so on. The model is built on a system level and expands risk analysis beyond the simple party views. It is a multi-party model which seeks to find "win-win" solutions for all parties (or to expose shortcomings of projects where all parties cannot "win"). Such model application will help in justifying projects that might otherwise be discarded as too complex and too risky, or expose projects that will not produce demanded economic performance. Findings and conclusions. The inputs of the model are referred to as being probabilistic and deterministic. The outputs of the model are the Net Present Values (NPV) of the client and the ESCO, respectively. The probabilistic inputs are either probability-distributed or simulated with the correlation coefficients from historical data. The deterministic inputs are referred to as either discrete arrays or single values. Multiple scenarios are generated in accordance with the number of the discrete arrays and the number of the values in each array. In each scenario, all probabilistic inputs are simulated, combined with the values randomly picked from the discrete arrays, and entered into the model. The output analysis is based on simulated NPVs for the primary parties (client and ESCO). The major contributions of the research include: (1) develop an analysis protocol for the parties involved in an ESPC project depending on the inputs and outputs of the proposed energy system, (2) develop a procedure to empower the parties involved in an ESPC project with information regarding the inherent risks, and (3) develop a procedure to present graphical outputs of multiple scenarios in an ESPC project to help the involved parties understand the influence of the significant inputs on the ESPC project.
Cities all around the world are faced with a rapid increase of urban population, and their crucial sustainable development issue becomes energy management. Moreover, the national energy management sector is slowly passing from government surveillance to the responsibility of local municipalities. The energy efficiency management in cities helps local governments to focus on important energy projects that have strong environmental aspects and financial feasibility. This paper analyzes the public lighting energy management in the Croatian city of Rijeka in order to determine the connection of the energy market liberalization and sustainable development in urban areas. Research results indicate a significant connection between investments in energy management of public lighting and its influence on lower emissions of carbon dioxide (CO2).
Cloud computing is a new technology product for providing IT services. Cloud computing is the convergence of verity of technology and devices that come together to transform an organization's way to building IT infrastructure. Despite all these differences of ways, we found common characteristics of cloud computing which includes massive scalability, ease of allocating resources, and a service management platform. Building on this foundation, cloud providers can deliver a range of services, from infrastructure to platforms to applications and business services.
Throughout the U.S. energy services company (ESCO) industry's history, public and institutional sector customers have provided the greatest opportunities for ESCOs to develop projects. Generally speaking, these facilities are large, possess aging infrastructure, and have limited capital budgets for improvements. The convergence of these factors with strong enabling policy support makes performance contracting an attractive and viable option for these customers. Yet despite these shared characteristics and drivers, there is surprising variety of experience among public/institutional customers and projects. This collaborative study examines the public/institutional markets in detail by comparing the overarching models and project performance in the federal government and the ''MUSH'' markets municipal agencies (state/local government), universities/colleges, K-12 schools,and hospitals that have traditionally played host to much of the ESCO industry's activity. Results are drawn from a database of 1634 completed projects held in partnership by the National Association of Energy Services Companies and Lawrence Berkeley National Laboratory (the NAESCO/LBNL database), including 129 federal Super Energy Savings Performance Contracts (ESPC) provided by the Federal Energy Management Program (FEMP) (Strajnic and Nealon 2003). Project data results are supplemented by interviews with ESCOs.
Hong Kong has experienced an average annual growth in final energy consumption of 4.7 per cent over the last ten years. An initiative being undertaken by a small number of government and commercial organisations is to limit their own consumption of electricity through performance contracting. Performance contracting is essentially a partnering process, where a client organisation partners with an energy management firm to identify and achieve energy savings for the client organisation. The research undertaken for this project has identified a number of factors that are considered to affect the success of performance contracting in Hong Kong. In a survey of practitioners, who have experience of performance contracting, some of the key benefits of this approach identified include the fact that there are substantial energy cost savings to be made. These savings are guaranteed by the partnering energy saving company and there are overall improved operational and plant efficiency gains. Key requirements for the success of such schemes include the setting-up of an agreed energy baseline against which to measure results and human factors such as commitment to the enterprise at all levels of the organisation and trust between the co-operating organisations. The paper expands the discussion on the benefits, obstacles and necessary ingredients for performance contracting that are likely to be applicable not just to Hong Kong but to the successful implementation of any such scheme.
Public–private partnerships are enjoying a global resurgence in popularity, but there is still much confusion around notions of partnership, what can be learned from our history with partnerships, and what is new about the partnership forms that are in vogue today. Looking at one particular family of public–private partnerships, the long-term infrastructure contract, this article argues that evaluations thus far point to contradictory results regarding their effectiveness. Despite their continuing popularity with governments, greater care is needed to strengthen future evaluations and conduct such assessments away from the policy cheerleaders.
As of 2010, the energy service market in Europe is still far from utilising its full potential. Wide-scale peer-reviewed studies investigating the development and up-to-date status of the European ESCo market are scarce. This article presents a comprehensive insight of the European ESCo industry based on the results from a large-scale survey carried out 2009-2010 in 39 European countries. The observed market development during the period 2007-2010, trends in business practices, and factors influencing the ESCo industry evolution are described. Finally, having considered the remaining barriers and the supporting factors as well as the successful experiences in Europe, policy measures that could further promote ESCo activities are proposed.
As global fuel reserves are depleted, alternative and more efficient forms of energy generation and delivery will be required. Combined heat and power with district heating (CHP-DH) provides an alternative energy production and delivery mechanism that is less resource intensive, more efficient and provides greater energy security than many popular alternatives. It will be shown that the economic viability of CHP-DH networks depends on several principles, namely (1) the optimisation of engineering and design principles; (2) organisational and regulatory frameworks; (3) financial and economic factors. It was found that in the long term DH is competitive with other energy supply and distribution technologies such as electricity and gas. However, in the short to medium term it is shown that economic risk, regulatory uncertainty and lock-in of existing technology are the most significant barriers to CHP-DH development. This research suggests that under the present regulatory and economic paradigm, the infrastructure required for DH networks remains financially prohibitive; the implementation of government policies are complicated and impose high transaction costs, while engineering solutions are frequently not implemented or economically optimised. If CHP-DH is going to play any part in meeting climate change targets then collaboration between public and private organisations will be required. It is clear from this analysis that strong local government involvement is therefore necessary for the co-ordination, leadership and infrastructural deployment of CHP-DH.
Developing countries have tremendous potential to increase energy efficiency but face several barriers before the potential can be realised. A lack of access to appropriate financing mechanisms is one of the important barriers. Energy service companies (ESCOs), a market oriented mechanism to improve energy efficiency, had successful experiences in developed countries such as the USA and Canada, and developing countries such as South Korea. ESCOs are in nascent stage in many developing countries and face several barriers that include market, finance and institutional barriers, poor energy pricing policies, high transaction costs etc. Market development through active involvement of governments as a customer, information provider, and policy maker is required to promote ESCOs. Development of specialised energy efficiency financing windows in appropriate financial institutions, development of skills for energy efficiency project appraisal and design of specialised financial products are other measures to accelerate the diffusion of energy efficiency.
Promotion of ESCO business is one way of increasing energy efficiency. However, it has a lot of barriers and challenges to be successful. The Korean case is a good example to show the reason why economically viable energy savings measures cannot be implemented and how this can be corrected. Although financing is essential for promoting energy efficiency investment and ESCO business, it is not the most crucial barrier to overcome. Along with a financial barrier, an institutional barrier should also be lifted for energy efficiency investment. In this regard, the role of government as a market creator as well as a rule setter through removing barriers and mobilizing necessary capital needs to be emphasized.
Although energy efficiency implementation is increasingly being recognized by policymakers worldwide as one of the most effective means to mitigating rising energy prices, tackling potential environmental risks, and enhancing energy security, mainstreaming its financing in developing country markets continues to be a challenge. Experience shows that converting cost-effective energy savings potential, particularly the demand-side improvement opportunities across sectors, into investments face many barriers and unforeseen transaction costs. This paper draws upon selected experiences with financing energy efficiency in developing countries to explore the key factors of various programmatic approaches and financing instruments that have been applied successfully for delivering energy efficiency solutions. Through case studies, a diverse range of institutional issues are examined related to the identification, packaging, designing, and monitoring approaches that have been used to catalyze traditional and innovative financing of energy efficiency projects. With adequate liquidity in major developing country markets and availability of modern energy savings technologies, it is often the institutional issues that become a key challenge to address in order to finance and implement robust programs. As further operational experience is gained, increased knowledge sharing can lead to scaling-up of such energy efficiency investments. The paper concludes with some ideas for accelerating implementation.
This comprehensive empirical analysis of US energy service company (ESCO) industry trends and performance employs two parallel analytical approaches: a survey of firms to estimate total industry size, and a database of ∼1500 ESCO projects, from which we report target markets and typical project characteristics, energy savings and customer economics. We estimate that industry investment for energy-efficiency related services reached US$2 billion in 2000 following a decade of strong growth. ESCO activity is concentrated in states with high economic activity and strong policy support. Typical projects save 150–200 MJ/m2/year and are cost-effective with median benefit/cost ratios of 1.6 and 2.1 for institutional and private sector projects. The median simple payback time (SPT) is 7 years among institutional customers; 3 years is typical in the private sector. Reliance on DSM incentives has decreased since 1995. Preliminary evidence suggests that state enabling policies have boosted the industry in medium-sized states. ESCOs have proven resilient in the face of restructuring and will probably shift toward selling “energy solutions”, with energy efficiency part of a package. We conclude that appropriate policy support—both financial and non-financial—can “jump-start” a viable private-sector energy-efficiency services industry that targets large institutional and commercial/industrial customers.
Energy service contracting can provide a cost-effective route to overcoming barriers to energy efficiency. Energy service contracts allow the client to reduce operating costs, transfer risk and concentrate attention on core activities. However, the energy services model may only be appropriate for a subset of energy services and energy using organisations. A challenge for both business strategy and public policy is to identify those situations in which energy service contracting is most likely to be appropriate and the conditions under which it is most likely to succeed.Energy service contracting is a form of outsourcing. It will only be chosen where the expected reduction in the production cost of supplying energy services can more than offset the transaction cost of negotiating and managing the relationship with the energy service provider. Production costs will be determined by a combination of the physical characteristics of the energy system and the technical efficiency of the relevant organisational arrangements, including economies of scale and specialisation. Transaction costs, in turn, will be determined by the complexity of the energy service, the ‘specificity’ of the investments made by the contractor, the competitiveness of the energy services market and the relevant legal, financial and regulatory rules. This paper develops these ideas into a general framework that may be used to assess the feasibility of energy service contracting in different circumstances. The framework leads to a number of hypotheses that are suitable for empirical test.
In Build-Operate-Transfer (BOT) infrastructure projects, host governments often provide subsidies, guarantees or alternative forms of support as incentives to attract private sector participation. A guaranteed level of minimum revenue, for example, can be specially designed to alleviate the concern of demand risk. Although researchers have generally acknowledged the significance of subsidies and guarantees leading toward successful negotiation, there is a lack of attempt to evaluate these concessions quantitatively. Without a deeper understanding of the value of these concessions, risk and reward may not be equitably matched in the proposed terms and arrangements. In this paper, relevant elements of a contractual package are treated as a form of real options. A proposition is put forward to incorporate the value of such options into the negotiation framework. By relying on simplifying assumptions on risk preferences, these options can be evaluated using Monte Carlo simulation of a discounted cash flow (DCF) model. The methodology is applied to the case of the Malaysia-Singapore Second Crossing, which shows that the value of a guarantee can indeed be significant relative to the basic net present value. The case study also highlights other aspects of flexibility in the design and execution of a project.
This article incorporates a political decision process into an urban land use model to predict the likely location of a public good. It fills an important gap in the literature by modeling the endogenous location of open space. The article compares open space decisions made under a majority-rules voting scheme with welfare-improving criterion and finds households tied to a location in space compete against each other for public goods located nearer them. Significant differences emerge between the two decision criteria, indicating that requiring referenda for open space decisions is likely to lead to inefficient outcomes. Specifically, many open space votes are likely to fail that would lead to welfare improvements, and any open space decisions that do pass will require amenities larger than needed to achieve the social optimum. The more dispersed and large the population, the larger is the gap between the socially efficient level and the level needed for a public referendum to pass.
I propose several mean-reversion jump-diffusion models to describe spot prices of energy commodities that maybevery costly to store. I incorporate multiple jumps, regime-switching and stochastic volatility into these models in order to capture the salient features of energy commodity prices due to physical characteristics of energy commodities. Prices of various energy commodity derivatives are derived under each model using the Fourier transform methods. In the context of deregulated electric power industry, I construct a real options approachtovalue physical assets such as generation and transmission facilities. The implications of modeling assumptions to the valuation of real assets are also examined.
- Energy Charter Secretariat
Energy Charter Secretariat, 2003. Third Part Financing. Achieving its Potential.
Energy Charter Secretariat, Brussels.
Guidelines for Successful Public-Private Partnerships
- European Commission
European Commission, 2003. Guidelines for Successful Public-Private Partnerships.
Brussels.