“Turning green into gold”: a framework for energy performance contracting (EPC) in China's real estate industry

Abstract 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.

[1]  J. Yudelson The Green Building Revolution , 2007 .

[2]  Mingming Hu,et al.  Energy Consumption and Management in Public Buildings in China: An Investigation of Chongqing , 2012 .

[3]  Patrick T.I. Lam,et al.  The market for green building in developed Asian cities—the perspectives of building designers , 2009 .

[4]  E. Bartlett,et al.  Informing the decision makers on the cost and value of green building , 2000 .

[5]  Joshua D. Kneifel,et al.  Life-cycle carbon and cost analysis of energy efficiency measures in new commercial buildings , 2010 .

[6]  Xiaoling Zhang,et al.  Green strategy for gaining competitive advantage in housing development: a China study , 2011 .

[7]  Jian Zuo,et al.  Green building research–current status and future agenda: A review , 2014 .

[8]  Baizhan Li,et al.  An investigation of the existing situation and trends in building energy efficiency management in China , 2007 .

[9]  Sin-Jin Lin,et al.  Construction method selection for green building projects to improve environmental sustainability by using an MCDM approach , 2013 .

[10]  Xiaoling Zhang,et al.  Barriers to Implement Green Strategy in the Process of Developing Real Estate Projects , 2011 .

[11]  Hilary Davies,et al.  Experience of energy performance contracting in Hong Kong , 2001 .

[12]  Lars J Nilsson,et al.  Building a business to close the efficiency gap: the Swedish ESCO Experience , 2010 .

[13]  B. Hwang,et al.  Green building project management: obstacles and solutions for sustainable development , 2012 .

[14]  Rob Taylor Achieving Sustainability in World Bank Energy Efficiency Projects: Lessons Learned Developing ESCOs in China , 2009 .

[15]  Qianli Deng,et al.  A simulation-based decision model for designing contract period in building energy performance contracting , 2014 .

[16]  Charles Goldman,et al.  Review of US ESCO industry market trends: an empirical analysis of project data , 2003 .

[17]  Paolo Soleri,et al.  Arcology: The City in the Image of Man , 1973 .

[18]  Helen E. Muga,et al.  An Integrated Assessment of the Sustainability of Green and Built-up Roofs , 2008 .

[19]  Niklaus Kohler,et al.  The relevance of Green Building Challenge: an observer's perspective , 1999 .

[20]  N. Wong,et al.  Life cycle cost analysis of rooftop gardens in Singapore , 2003 .

[21]  Edwin H.W. Chan,et al.  ANP model for sustainable Building Energy Efficiency Retrofit (BEER) using Energy Performance Contracting (EPC) for hotel buildings in China , 2013 .

[22]  Yupeng Luo,et al.  Delivering green buildings: Process improvements for sustainable construction , 2006 .

[23]  Lindsay Smith,et al.  Sustainability of an Industry: Green Buildings and Green Events , 2009 .

[24]  Hongbo Ren,et al.  Promotion of energy conservation in developing countries through the combination of ESCO and CDM: A case study of introducing distributed energy resources into Chinese urban areas , 2011 .

[25]  Edwin H.W. Chan,et al.  Success factors of energy performance contracting (EPC) for sustainable building energy efficiency retrofit (BEER) of hotel buildings in China , 2011 .

[26]  Zezhou Wu,et al.  Implementing Sustainable Management in Construction Industry , 2011 .

[27]  Edward Vine,et al.  An international survey of the energy service company (ESCO) industry , 2005 .

[28]  F. W. H. Yik,et al.  Partnership in building energy performance contracting , 2004 .

[29]  Xiaoling Zhang,et al.  Green property development practice in China: Costs and barriers , 2011 .

[30]  Lasse Okkonen,et al.  The Energy Services Company (ESCo) as business model for heat entrepreneurship-A case study of North Karelia, Finland , 2013 .

[31]  Amm Liu,et al.  Research Methods for Construction (3rd ed.) , 2008 .

[32]  Susanne Balslev Nielsen,et al.  Greening Public Buildings: ESCO-contracting in Danish Municipalities , 2013 .

[33]  Raymond J. Cole,et al.  Reconciling theory and practice of life-cycle costing , 2000 .

[34]  Liyin Shen,et al.  Application of low waste technologies for design and construction: A case study in Hong Kong , 2012 .

[35]  Patrick T.I. Lam,et al.  A CONCEPTUAL FRAMEWORK FOR DELIVERING SUSTAINABLE BUILDING ENERGY EFFICENCY RETROFIT USING THE ENERGY PERFORMANCE CONTRACTING (EPC) IN CHINA , 2013 .

[36]  Satu Pätäri,et al.  Energy Service Companies and Energy Performance Contracting: is there a need to renew the business model? Insights from a Delphi study , 2014 .

[37]  Qiping Shen,et al.  Comparative study of greenhouse gas emissions between off-site prefabrication and conventional construction methods: Two case studies of residential projects , 2013 .

[38]  Timothy Carter,et al.  Life-cycle cost-benefit analysis of extensive vegetated roof systems. , 2008, Journal of environmental management.

[39]  Geoffrey Qiping Shen,et al.  The User Pre-Occupancy Evaluation Method in designer–client communication in early design stage: A case study , 2013 .

[40]  A. Dimoudi,et al.  Energy and environmental indicators related to construction of office buildings , 2008 .

[41]  Pengpeng Xu A Model for Sustainable Building Energy Efficiency Retrofit (BEER) Using Energy Performance Contracting (EPC) Mechanism for Hotel Buildings in China , 2012 .

[42]  John Kelly,et al.  Application of value management in project briefing , 2005 .

[43]  Uǧur Akman,et al.  Current snapshot of the Turkish ESCO market , 2013 .

[44]  N. Meinshausen,et al.  Greenhouse-gas emission targets for limiting global warming to 2 °C , 2009, Nature.