Risk allocation for energy performance contract from the perspective of incomplete contract: a study of commercial buildings in China
Purpose – This article aims to establish a dynamic Energy Performance Contract (EPC) risk allocation model for commercial buildings based on the theory of Incomplete Contract. The purpose is to fill the policy vacuum and allow stakeholders to manage risks in energy conservation management by EPCs to...
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| Format: | Article |
| Language: | English |
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Emerald Publishing
2023-07-01
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| Series: | International Journal of Climate Change Strategies and Management |
| Subjects: | |
| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/IJCCSM-11-2021-0130/full/pdf |
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| author | Shiyu Wan Yisheng Liu Grace Ding Goran Runeson Michael Er |
| author_facet | Shiyu Wan Yisheng Liu Grace Ding Goran Runeson Michael Er |
| author_sort | Shiyu Wan |
| collection | DOAJ |
| description | Purpose – This article aims to establish a dynamic Energy Performance Contract (EPC) risk allocation model for commercial buildings based on the theory of Incomplete Contract. The purpose is to fill the policy vacuum and allow stakeholders to manage risks in energy conservation management by EPCs to better adapt to climate change in the building sector. Design/methodology/approach – The article chooses a qualitative research approach to depict the whole risk allocation picture of EPC projects and establish a dynamic EPC risk allocation model for commercial buildings in China. It starts with a comprehensive literature review on risks of EPCs. By modifying the theory of Incomplete Contract and adopting the so-called bow-tie model, a theoretical EPC risk allocation model is developed and verified by interview results. By discussing its application in the commercial building sector in China, an operational EPC three-stage risk allocation model is developed. Findings – This study points out the contract incompleteness of the risk allocation for EPC projects and offered an operational method to guide practice. The reasonable risk allocation between building owners and Energy Service Companies can realize their bilateral targets on commercial building energy-saving benefits, which makes EPC more attractive for energy conservation. Originality/value – Existing research focused mainly on static risk allocation. Less research was directed to the phased and dynamic risk allocation. This study developed a theoretical three-stage EPC risk allocation model, which provided the theoretical support for dynamic EPC risk allocation of EPC projects. By addressing the contract incompleteness of the risk allocation, an operational method is developed. This is a new approach to allocate risks for EPC projects in a dynamic and staged way. |
| first_indexed | 2024-03-13T00:00:44Z |
| format | Article |
| id | doaj.art-3d5f8eb37b7c4dd2a98f2fc39f5dbe31 |
| institution | Directory Open Access Journal |
| issn | 1756-8692 |
| language | English |
| last_indexed | 2024-03-13T00:00:44Z |
| publishDate | 2023-07-01 |
| publisher | Emerald Publishing |
| record_format | Article |
| series | International Journal of Climate Change Strategies and Management |
| spelling | doaj.art-3d5f8eb37b7c4dd2a98f2fc39f5dbe312023-07-13T10:17:36ZengEmerald PublishingInternational Journal of Climate Change Strategies and Management1756-86922023-07-0115445747810.1108/IJCCSM-11-2021-0130Risk allocation for energy performance contract from the perspective of incomplete contract: a study of commercial buildings in ChinaShiyu Wan0Yisheng Liu1Grace Ding2Goran Runeson3Michael Er4School of Economics and Management, Beijing Jiaotong University, Beijing, China and School of Built Environment, Faculty of Design Architecture and Building, University of Technology Sydney, Sydney, AustraliaSchool of Economics and Management, Beijing Jiaotong University, Beijing, ChinaFaculty of Design, Architecture, and Building, University of Technology Sydney, Sydney, AustraliaFaculty of Design, Architecture, and Building, University of Technology Sydney, Sydney, AustraliaFaculty of Design, Architecture, and Building, University of Technology Sydney, Sydney, AustraliaPurpose – This article aims to establish a dynamic Energy Performance Contract (EPC) risk allocation model for commercial buildings based on the theory of Incomplete Contract. The purpose is to fill the policy vacuum and allow stakeholders to manage risks in energy conservation management by EPCs to better adapt to climate change in the building sector. Design/methodology/approach – The article chooses a qualitative research approach to depict the whole risk allocation picture of EPC projects and establish a dynamic EPC risk allocation model for commercial buildings in China. It starts with a comprehensive literature review on risks of EPCs. By modifying the theory of Incomplete Contract and adopting the so-called bow-tie model, a theoretical EPC risk allocation model is developed and verified by interview results. By discussing its application in the commercial building sector in China, an operational EPC three-stage risk allocation model is developed. Findings – This study points out the contract incompleteness of the risk allocation for EPC projects and offered an operational method to guide practice. The reasonable risk allocation between building owners and Energy Service Companies can realize their bilateral targets on commercial building energy-saving benefits, which makes EPC more attractive for energy conservation. Originality/value – Existing research focused mainly on static risk allocation. Less research was directed to the phased and dynamic risk allocation. This study developed a theoretical three-stage EPC risk allocation model, which provided the theoretical support for dynamic EPC risk allocation of EPC projects. By addressing the contract incompleteness of the risk allocation, an operational method is developed. This is a new approach to allocate risks for EPC projects in a dynamic and staged way.https://www.emerald.com/insight/content/doi/10.1108/IJCCSM-11-2021-0130/full/pdfEnergy performance contractDynamic risk allocationIncomplete contractEnergy efficiency retrofitCommercial buildingsEnergy conservation and management |
| spellingShingle | Shiyu Wan Yisheng Liu Grace Ding Goran Runeson Michael Er Risk allocation for energy performance contract from the perspective of incomplete contract: a study of commercial buildings in China International Journal of Climate Change Strategies and Management Energy performance contract Dynamic risk allocation Incomplete contract Energy efficiency retrofit Commercial buildings Energy conservation and management |
| title | Risk allocation for energy performance contract from the perspective of incomplete contract: a study of commercial buildings in China |
| title_full | Risk allocation for energy performance contract from the perspective of incomplete contract: a study of commercial buildings in China |
| title_fullStr | Risk allocation for energy performance contract from the perspective of incomplete contract: a study of commercial buildings in China |
| title_full_unstemmed | Risk allocation for energy performance contract from the perspective of incomplete contract: a study of commercial buildings in China |
| title_short | Risk allocation for energy performance contract from the perspective of incomplete contract: a study of commercial buildings in China |
| title_sort | risk allocation for energy performance contract from the perspective of incomplete contract a study of commercial buildings in china |
| topic | Energy performance contract Dynamic risk allocation Incomplete contract Energy efficiency retrofit Commercial buildings Energy conservation and management |
| url | https://www.emerald.com/insight/content/doi/10.1108/IJCCSM-11-2021-0130/full/pdf |
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