Risk allocation for energy performance contract from the perspective of incomplete contract: a study of commercial buildings in China

Wan, S; Liu, Y; Ding, G; Runeson, G; Er, M

Risk allocation for energy performance contract from the perspective of incomplete contract: a study of commercial buildings in China

Wan, S Liu, Y Ding, G Runeson, G Er, M

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Publisher:: Emerald
Publication Type:: Journal Article
Citation:: International Journal of Climate Change Strategies and Management, 2022
Issue Date:: 2022-01-01

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Field	Value	Language
dc.contributor.author	Wan, S
dc.contributor.author	Liu, Y
dc.contributor.author	Ding, G
dc.contributor.author	Runeson, G
dc.contributor.author	Er, M
dc.date.accessioned	2023-04-20T03:09:39Z
dc.date.available	2023-04-20T03:09:39Z
dc.date.issued	2022-01-01
dc.identifier.citation	International Journal of Climate Change Strategies and Management, 2022
dc.identifier.issn	1756-8692
dc.identifier.uri	http://hdl.handle.net/10453/170013
dc.description.abstract	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.
dc.language	en
dc.publisher	Emerald
dc.relation.ispartof	International Journal of Climate Change Strategies and Management
dc.relation.isbasedon	10.1108/IJCCSM-11-2021-0130
dc.rights	info:eu-repo/semantics/openAccess
dc.subject	0502 Environmental Science and Management
dc.title	Risk allocation for energy performance contract from the perspective of incomplete contract: a study of commercial buildings in China
dc.type	Journal Article
utslib.for	0502 Environmental Science and Management
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Design, Architecture and Building
pubs.organisational-group	/University of Technology Sydney/Faculty of Engineering and Information Technology
pubs.organisational-group	/University of Technology Sydney/Faculty of Engineering and Information Technology/School of Civil and Environmental Engineering
pubs.organisational-group	/University of Technology Sydney/Strength - CBI - Centre for Built Infrastructure
pubs.organisational-group	/University of Technology Sydney/Strength - CCDP - Contemporary Design Practice
pubs.organisational-group	/University of Technology Sydney/e-Press
utslib.copyright.status	open_access	*
dc.date.updated	2023-04-20T03:09:38Z
pubs.publication-status	Published

Abstract:

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.

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http://hdl.handle.net/10453/170013