Top

Energy Efficiency

Published in:

19-01-2018 | Original Article

A system dynamics approach to analyse the impact of energy efficiency policy on ESCO ventures in European Union countries: a case study of Portugal

Published in: Energy Efficiency | Issue 4/2018

Activate our intelligent search to find suitable subject content or patents.

search-config

AI-assisted search

Off

Abstract

The development of a competitive and sustainable market for energy performance contracting (EPC) projects supplied by energy service companies (ESCO) may contribute to realising the existent potential of energy savings. Nevertheless, in different countries, like Portugal, this market is still immature and remains far below its promised potential. Different from the existent research that assumes factors operate independently and focusses on how to remove barriers to the adoption of EPC, this study provides insights into how delayed impacts from interdependent policies affect the business processes of an energy service business venture. To understand the relationships beneath the dynamics of those small and developing ESCO markets in the European Union (EU), a system dynamics model of an ESCO venture was developed. The model simulation provides a powerful tool to improve understanding and accelerate learning of the policies that critically impact venture performance. The base case simulation shows an unattractive market value added (MVA) and a high probability of a firm’s failure. The demand simulation is quite sensitive to the word-of-mouth (WOM) parameter, and simultaneous initiatives to positively intensify it with incentive public policies such as low interest rate and demonstration projects significantly increased the MVA, reduced the probability of the firm’s failure, and consequently increased the widespread adoption of EPC.

previous article Analysis of different scenarios of car paint oven redesign to achieve desired indoor air temperature

next article Improving energy efficiency in poultry farms through LED usage: a provincial study

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Technik"

Online-Abonnement

Mit Springer Professional "Technik" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 390 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Maschinenbau + Werkstoffe

Jetzt Wissensvorsprung sichern!

inform now

Available only for authorised users

Backlund, S., & Eidenskog, M. (2013). Energy service collaborations—it is a question of trust. Energy Efficiency, 6(3), 511–521. https://doi.org/10.1007/s12053-012-9189-z CrossRef

Barlas, Y. (1996). Formal aspects of model validity and validation in system dynamics. System Dynamics Review 12, 183–210.

Bass, F. M. (1969). A new product growth model for consumer durables. Management Science, 13, 215–227.CrossRefMATH

Bertoldi, P., & Boza-Kissb, B. (2017). Analysis of barriers and drivers for the development of the ESCO markets in Europe. Energy Policy, 107, 345–355. https://doi.org/10.1016/j.enpol.2017.04.023 CrossRef

Bertoldi, P., Rezessy, B., & Vine, E. (2006). Energy service companies in European countries: current status and a strategy to foster their development. Energy Policy, 34(14), 1818–1832. https://doi.org/10.1016/j.enpol.2005.01.010 CrossRef

Bertoldi, P., Boza-Kiss, B., Panevm, S., & Labanca, N. (2014). ESCO Market Report 2013 - EUR 26691 EN. Brussels: European Commission, Joint Research Centre, Institute for Energy.

Blumberga, A., Blumberga, D., Bazbauers, G., Zogla, G., & Laicane, I. (2014). Sustainable development modelling for the energy sector. Journal of Cleaner Production, 63, 134–142. https://doi.org/10.1016/j.jclepro.2013.05.020 CrossRef

Brown, M. A. (2001). Market failures and barriers as a basis for clean energy policies. Energy Policy, 29(14), 1197–1207. https://doi.org/10.1016/S0301-4215(01)00067-2 CrossRef

Deng, Y. Y., Blok, K., & van der Leun, K. (2012). Transition to a fully sustainable global energy system. Energy Strategy Review, 1(2), 109–121. https://doi.org/10.1016/j.esr.2012.07.003 CrossRef

Deng, Q., Zhang, L., Cui, Q., & Jiang, X. (2014). A simulation-based decision model for designing contract period in building energy performance contracting. Building and Environment, 71, 71–80. https://doi.org/10.1016/j.buildenv.2013.09.010 CrossRef

Deng, Q., Jiang, X., Zhang, L., & Cui, Q. (2015). Making optimal investment decisions for energy service companies under uncertainty: a case study. Energy, 88, 234–243. https://doi.org/10.1016/j.energy.2015.05.004 CrossRef

Dreessen, T. (2003). Advantages and disadvantages of the two dominant world ESCO models: shared savings and guaranteed savings. In P. Bertoldi (Ed.), Proceedings of the first pan European Conference on energy service companies, Milan.

Dyner, I., Larsen, E., & Franco, C. J. (2009). Games for electricity traders: understanding risk in a deregulated industry. Energy Policy, 37(2), 465–471. https://doi.org/10.1016/j.enpol.2008.09.075 CrossRef

Fang, W. S., Miller, S. M., & Yeh, C. C. (2012). The effect of ESCOs on energy use. Energy Policy, 51, 558–568. https://doi.org/10.1016/j.enpol.2012.08.068 CrossRef

Ford, A. (2008). Simulation scenarios for rapid reduction in carbon dioxide emissions in the western electricity system. Energy Policy, 36(1), 443–455. https://doi.org/10.1016/j.enpol.2007.09.023 CrossRef

Goldman, C., Hopper, N., & Osborn, J. (2005). Review of US ESCO industry market trends: an empirical analysis of project data. Energy Policy, 33(3), 387–405. https://doi.org/10.1016/j.enpol.2003.08.008 CrossRef

Hannon, M. J., Foxon, T. J., & Gale, W. F. (2013). The co-evolutionary relationship between energy service companies and the UK energy system: implications for a low-carbon transition. Energy Policy, 61, 1031–1045. https://doi.org/10.1016/j.enpol.2013.06.009 CrossRef

Hansen, S.J. (2011). ESCOs around the world. Strategic Planning for Energy and the Environment 30 (3), 9–15.

Heiskanen, E., Lovio, R., & Jalas, M. (2011). Path creation for sustainable consumption: promoting alternative heating systems in Finland. Journal of Cleaner Production, 19(16), 1892–1900. https://doi.org/10.1016/j.jclepro.2011.02.005 CrossRef

Kindström, D., Ottosson, M., & Thollander, P. (2017). Driving forces for and barriers to providing energy services—a study of local and regional energy companies in Sweden. Energy Efficiency, 10(1), 21–39. https://doi.org/10.1007/s12053-016-9437-8 CrossRef

Kostka, G., & Shin, K. (2013). Energy conservation through energy service companies: empirical analysis from China. Energy Policy, 52, 748–759. https://doi.org/10.1016/j.enpol.2012.10.034 CrossRef

Limaye, D. R., & Limaye, E. S. (2011). Scaling up energy efficiency: the case for a super ESCO. Energy Efficiency, 4(2), 133–144. https://doi.org/10.1007/s12053-011-9119-5 CrossRef

Marino, A., Bertoldi, P., Rezessy, S. (2010). Energy service companies market in Europe - status report 2010. Institute for energy, joint research centre, European commission, JRC 59863, EUR 24516 EN, Luxembourg, p. 1–90.

Marino, A., Bertoldi, P., Rezessy, S., & Boza-Kiss, B. (2011). A snapshot of the European energy service market in 2010 and policy recommendations to foster a further market development. Energy Policy, 39(10), 6190–6198. https://doi.org/10.1016/j.enpol.2011.07.019 CrossRef

Miller, D., Sterman, J. (2007). New venture commercialization of clean energy technologies. Proceedings of the 25th International System Dynamics Conference, Boston.

Mills, E., Kromer, S., Weiss, G., & Mathew, P. A. (2006). From volatility to value: analyzing and managing financial and performance risk in energy savings projects. Energy Policy, 34(2), 188–199. https://doi.org/10.1016/j.enpol.2004.08.042 CrossRef

Morecroft, J. (2015). Strategic modelling and business dynamics: a feedback systems approach. Chichester: John Wiley & Sons. https://doi.org/10.1002/9781119176831 CrossRef

Okay, N., & Akman, U. (2010). Analysis of ESCO activities using country indicators. Renewable Sustainable Energy Review, 14(9), 2760–2771. https://doi.org/10.1016/j.rser.2010.07.013 CrossRef

Painuly, J. P., Park, H., Lee, M. K., & Noh, J. (2003). Promoting energy efficiency financing and ESCOs in developing countries: mechanisms and barriers. Journal of Cleaner Production, 11(6), 659–665. https://doi.org/10.1016/S0959-6526(02)00111-7 CrossRef

Patari, S., & Sinkkonen, K. (2014). Energy service companies and energy performance contracting: is there a need to renew the business model? Insights from a Delphi study. Journal of Cleaner Production, 66, 264–271. https://doi.org/10.1016/j.jclepro.2013.10.017 CrossRef

Patari, S., Annala, S., Jantunen, A., Viljainen, S., & Sinkkonen, A. (2016). Enabling and hindering factors of diffusion of energy service companies in Finland—results of a Delphi study. Energy Efficiency, 9(6), 1447–1460. https://doi.org/10.1007/s12053-016-9433-z CrossRef

Roshchanka, V., & Evans, M. (2016). Scaling up the energy service company business: market status and company feedback in the Russian Federation. Journal of Cleaner Production, 112, 3905–3914. https://doi.org/10.1016/j.jclepro.2015.05.078 CrossRef

Sardinou, E. (2008). Barriers to industrial energy efficiency investments in Greece. Journal of Cleaner Production, 16(13), 1416–1423. https://doi.org/10.1016/j.jclepro.2007.08.002 CrossRef

Soroye, K., & Nilsson, L. (2010). Building a business to close the efficiency gap: the Swedish ESCO experience. Energy Efficiency, 3(3), 237–256. https://doi.org/10.1007/s12053-009-9069-3 CrossRef

Steinberger, J., Niel, J., & Bourg, D. (2009). Profiting from negawatts: reducing absolute consumption and emissions through a performance-based energy economy. Energy Policy, 37(1), 361–370. https://doi.org/10.1016/j.enpol.2008.08.030 CrossRef

Sterman, J. (2000). Business dynamics: system thinking and modeling for a complex world. New York: Irwin McGraw-Hill.

Taylor, R.P., Govindarajalu, C., Levin, J., Meyer, A.S., Ward, W.A. (2008). Financing energy efficiency: lessons from Brazil, China, India, and beyond. Energy sector management assistance program (ESMAP). Washington, DC: World Bank. © World Bank. https://openknowledge.worldbank.org/handle/10986/6349. Accessed 16 May 2017.

Thollander, P., & Ottosson, M. (2008). An energy efficient Swedish pulp and paper industry - exploring barriers to and driving forces for cost-effective energy efficiency investments. Energy Efficiency, 1(1), 21–34. https://doi.org/10.1016/j.jclepro.2010.04.011

Thumann, A., & Woodroof, E. (2009). Energy project financing: resources and strategies for success. Lilburn: The Fairmont Press.

Trianni, A., Cagno, E., Thollander, P., & Backlund, S. (2013). Barriers to industrial energy efficiency in foundries: a European comparison. Journal of Cleaner Production, 40(21), 161–176. https://doi.org/10.1016/j.jclepro.2012.08.040 CrossRef

Vine, E. (2005). An international survey of the energy service company (ESCO) industry. Energy Policy, 33(5), 691–704. https://doi.org/10.1016/j.enpol.2003.09.014 CrossRef

Warren, K. (2008). Strategic management dynamics. Chichester: John Wiley & Sons.

Worrell, E., Bernstein, L., Roy, J., Price, L., & Harnisch, J. (2009). Industrial energy efficiency and climate change mitigation. Energy Efficiency, 2(2), 109–123. https://doi.org/10.1007/s12053-008-9032-8 CrossRef

Young, S., O’Byrne, S. (2000). EVA and value-based management: a practical guide to implementation. New York: McGraw-Hill.

Title: A system dynamics approach to analyse the impact of energy efficiency policy on ESCO ventures in European Union countries: a case study of Portugal
Publication date: 19-01-2018
Published in: Energy Efficiency / Issue 4/2018
Print ISSN: 1570-646X
Electronic ISSN: 1570-6478
DOI: https://doi.org/10.1007/s12053-018-9617-9

Springer Professional

Abstract

Please log in to get access to your license.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Technik"

Other articles of this Issue 4/2018

Improving energy efficiency in poultry farms through LED usage: a provincial study

Dwelling’s energy saving through the experimental study and modeling of technological interventions in a cold temperate climate of Argentina

Analysis of different scenarios of car paint oven redesign to achieve desired indoor air temperature

Assessing the energy saving potential of anidolic system in the tropics

Evaluating energy efficiency policy: understanding the ‘energy policy epistemology’ may explain the lack of demand for randomised controlled trials

Low carbon scenarios for higher thermal comfort in the residential building sector of South Eastern Europe