1. Introduction
The Swedish parliament has committed itself to comply with European Union (EU) legislation and has incorporated several EU directives into Swedish law, such as the Renewables Directive 2009/28/EC [
1], requiring 20% of all energy used in the EU to be from renewable sources by 2020. The Energy Efficiency Directive 2012/27/EU [
2] aims to see a 17% improvement in the efficiency of energy use by 2020. An important means of achieving the goals above is to raise the energy efficiency levels of the existing building stock through measures applied during the refurbishment process [
3,
4,
5]. The built environment and in particular the housing sector stands for about 38 percent of Sweden’s energy consumption and the housing sector alone accounts for about 25% of all of the electricity consumption every year [
6]. While, the price of electricity has continued to rise since 1999, there has been a sharp downward trend in the price of photovoltaic panels and, consequently, the cost of electricity from these units [
7].
In Sweden, the tenant-owner cooperative (TOC) housing sector accounts for about 36% of the multi-family housing. Much of the stock is in need of energy efficiency measures, due to age and other problems typical for buildings from the period 1965–1974 in which one million dwellings of various tenure were constructed [
3,
8]. TOCs can lower their energy use by 20% by the year 2020 through a number of measures, such as adjustment of the heating system [
9]. Installing building-applied photovoltaics (BAPV) at the same time as the renovation of the roof is taking place could provide a cost efficient access to a source of renewable energy for the TOC. Studies about investors in renewable electricity production show that there is a need for research on the motives for the investment, the background and personal characteristics of the investor/decision maker, and how this affects the decision [
10]. The tenant-owner tenure form provides an interesting research area in the field of renewable energy sources and sustainable property management. It encompasses the wishes of the individual unit dweller, who is, at the same time, a shareholder in, and collectively responsible for the multiple unit multi-family property. Conflicting interests and agency-related incentive problems among different parties can affect the costs related to the investment as well as the willingness to carry out an investment. The adoption of large-scale residential BAPV presents several challenges for the non-professional decision maker sitting on the executive board of a tenant-owner cooperative housing association. There is a need to understand these problems if the potential for renewable energy from BAPV that is provided by the large roof space under the ownership of TOCs is to be utilized to the full.
An innovation is an idea, practice, or object that is perceived as new by an individual or other unit of potential adoption [
11]. The installation of BAPV by tenant-owner cooperatives is an innovation in that it replaces or compliments the electric system that has been in use in the sector for a very long time. An analysis of the procedure as well as the arguments that are taken into consideration before a decision to adopt an innovation is made, helps to clarify the reasons behind the choices made by the potential adopter [
11,
12,
13]. Within office properties, potential adopters have been identified as those persons in a decision-making position in a project development organization who decide what technological innovations to incorporate in the construction of a new office building [
14]. In a TOC, the acquisition of the BAPV system will depend on decisions of the members of the executive boards who, in this study are considered to be the “potential adopters”.
Literature on the adoption of renewable energy technologies in the built environment covers various types of housing owners, buildings and properties, such as housing associations in the Netherlands [
5,
15]; public municipal housing companies in Sweden [
3]; owner-occupier housing [
16,
17,
18,
19]; and office buildings [
14]. Factors affecting the adoption of PV in the built environment have been presented in a number of studies [
20,
21,
22,
23,
24]. However, there is little on BAPV in the multi-family tenant-owner cooperative housing sector. The purpose of this paper is to study how the organization of property management and the decision-making structure in tenant-owner cooperatives (TOCs) in Sweden facilitates or hampers the adoption of large-scale residential building applied photovoltaics (BAPV) by the executive boards in this housing sector. The focus is on the decision-making process and the challenges experienced by the potential adopters during the implementation phase.
The main research question is:
How do the organization of property management and the decision-making structure in the Swedish tenant-owner cooperative housing sector affect the adoption of large-scale residential BAPV by the TOCs?
This paper, which presents results based mainly on interviews in seven TOCs, is part of research at KTH—Royal Institute of Technology with the aim of determining the circumstances in which the installation of BAPV panels on existing apartment buildings can be an economically and technically viable energy source.
The case studies seek to find answers to the following research questions:
- RQ1.
What are the reasons behind the wish to and/or decision by executive boards in TOCs to install large-scale BAPV on the roofs of the buildings owned by the tenant-owner cooperative?
- RQ2.
How did the tenant-owner cooperatives that installed BAPV organize the work and what were the challenges they encountered as well as the solutions they used?
The structure of the paper is as follows:
Section 2 presents a brief background on PV in Sweden and a description of the Swedish tenant-owner tenure, as well as agency related problems in the management of cooperative housing.
Section 3 describes the literature on the adoption of sustainable innovations as well as the motives for and barriers to the adoption of energy efficiency measures.
Section 4 presents the methods used to collect the data and to analyze it.
Section 5 contains the results from the empirical analysis.
Section 6 presents the discussion of the results as well as some concluding remarks. In this paper, large-scale residential BAPV denotes rooftop-mounted systems of at least 50 kWp installed in the multi-family housing sector.
5. Results
This section starts with a general description of all of the TOCs in the study followed by a descriptive presentation of the results of the interviews from the four TOCs in the first step of the study. The results from the three TOCs in the second step of the study are thereafter presented in form of case reports.
5.1. Brief Description of the Seven Cooperatives in the Study
Responses to questions under topics 1 to 3 in the interview guide revealed that there was an average of five persons on the executive board in the examined tenant-owner cooperatives with a majority being men over 50 years except in two of the seven cases. Deputies participated in most of the board meetings and contributed ideas but their right to vote was restricted. A review of text documents as well as responses to questions on the economic stability of the TOC indicated that the gender of the persons who had a majority on the executive board appeared to have had some effect on the maintenance, as well as sustainable environment activities that had been prioritized in the TOC. Persons that have served on the executive board over several mandate periods can be a good source of information about the reasons for activities carried out in the past and six out of the seven executive boards had at least one ordinary member that had been on the board for more than seven years. Five out of the seven cooperatives had members on the executive board with a high degree of technical know-how though this was not in the field of BAPV systems. Three of the executive boards had members whose employment was or had been in the financial sector and therefore can be considered to be more financially competent than the average board member. All of the seven cooperatives had outsourced their accounting as well as technical property management. However, financial management was kept in-house as a responsibility of the treasurer.
All of the studied cooperatives had both short-term (1–3 years), as well as long-term (4–25 years) maintenance plans that they strived to follow. The external property managers drafted the plans, which the executive board analyzed and revised when necessary. Maintenance priorities often followed the long-term plans but had in some cases shifted according to the composition of the executive board or due to factors of an acute nature beyond the board’s control. The economic status of the tenant-owner cooperatives in the study appeared to be satisfactory though it varied broadly within the seven cases. There was collective purchase of household electricity in two of the cooperatives. One of these had individual metering for the household electricity while in the second one, the cost of the electricity consumed within the dwelling was included in the annual fee paid to the cooperative. Five of the studied cooperatives appeared to have electricity costs per square meter of dwelling space (
Table 1) that were much higher than the annual average of €2.17/m
2 of total dwelling space for a multi-family building constructed or refurbished during the period 1960–1990 [
61]. It is assumed that a very large difference between this average and what the TOC pays would prompt the executive board to carry out measures to lower the electricity costs. The reported costs in two of the TOCs were not comparable as they included household electricity.
Table 1.
Some features of the studied tenant-owner cooperatives.
Table 1.
Some features of the studied tenant-owner cooperatives.
TOC | Dwellings | Year of Construction | Size of board | Men on board 1 | Average age | BAPV installed | Electricity cost 2 (2013) |
---|
TOC 1 | 301 | 1971 | 5 | 33% (40) | 53 | - | - |
TOC 2 | 376 | 1961 | 5 | 56% (80) | 48 | - | 9.55 |
TOC 3 | 506 | 1968 | 5 | 78% (80) | 56 | - | 13.90 |
TOC 4 | 651 | 1962 | 7 | 58% (71) | 55 | - | 13.46 |
TOC 5 | 16 | 1992 | 6 | 33% (33) | 44 | 50 kWp | - |
TOC 6 | 60 | 1947 | 5 | 50% (60) | 41 | 140 kWp | 12.59 |
TOC 7 | 546 | 1966 | 7 | 57% (57) | 55 | 627 kWp | 16.94 1 |
5.2. Results from Step 1 of the Study—TOCs that Had Not Yet Installed BAPV
An analysis of the responses as well as text documents during step 1 of the study revealed that all of the four TOCs had carried out various energy-saving measures such as installing district heating and the use of low-energy bulbs in the common areas. However, two of the TOCs were considering switching to some other heating energy source. This was due to the fact that the energy prices for district heating had risen much faster than what had been anticipated at the time the decision to use this energy source was taken. This was also a cause of concern when considering the adoption of BAPV, as there was uncertainty about how profitable the investment would be, given the experience with the district heating. Though all of the cooperatives were considering installing BAPV on the roofs of their buildings only two of them had not yet renovated their roofs, and could think of combining the installation and the renovation activities.
According to responses from these four TOCs, the wish to adopt BAPV was due to the fact that it was seen as a way of reducing the TOC’s operation costs, as well as a means of contributing towards a sustainable environment. Another motive given by a cooperative that had very good economy and with an executive board that had served together for a long time was that: “We are looking for thrilling projects to undertake in order to promote the image of the cooperative”.
The status of the maintenance of the buildings in all of the cooperatives appeared to be satisfactory and followed a long-term plan except in one TOC in which the operation and maintenance strategy as well as priorities chosen over a number of years did not reflect the poor economic status of this cooperative. The reason behind the wish to install BAPV in that TOC which was: “we want to be the TOC in our area with the lowest annual fee for the members”, appears to be in the same spirit.
During the interviews one TOC expressed a strong commitment to go ahead as soon as possible with the process to adopt BAPV. This TOC also appeared to have come very far in their decision-making process according to the framework presented in Dieperink
et al. [
12]. A second TOC answered that they could go ahead and install BAPV as soon as possible. However, an analysis of their text documents revealed that the economic status of this cooperative was not very good. Another TOC could be interested in installing BAPV in case they got more information especially about the profitability of the investment. This cooperative had good economy and an executive board comprising of members who felt dynamic and not afraid of “innovative” ways to lower operation costs. However, costly and time-consuming maintenance works had turned the voluntary work of the executive board into something that resembled full time employment, which hindered plans for any new projects. Responses from the fourth TOC indicated a positive inclination towards installing BAPV but movements in the ground under the buildings had led to acute maintenance needs and the decision to postpone investments in other activities. At the time of the meetings, the effect of restrictions on imports of solar panels made in China was of concern, as this affected the investment calculations. Even though the focus of the interviews was on BAPV, the underlying concern of the executive members was on energy costs in general and they considered the adoption of BAPV in comparison to or as a complement to other energy sources. There was concern about how long the investment support for BAPV installations would last, as synchronizing the installation with other maintenance activities could provide economies of scale. There was also hope that the government would allow net metering which, at that time, was still under investigation. Members of the executive boards appeared not to be so knowledgeable about technical issues concerning BAPV and their worries focused mainly on issues that affected the cooperative’s economic status, which they found easier to understand.
In summary, the results of this part of the study indicate that the TOCs wished to adopt BAPV because of a need to lower operating costs; in order to achieve cost efficiency in the installation process in case the BAPV system was put up at the same time as the roof was being renovated; as a means of contributing towards a sustainable environment and as a way to promote the image of the cooperative. The cooperatives had already carried out various energy-efficiency measures and the installation of BAPV appeared to be in line with general strategies towards environment friendly property management.
5.3. Experiences from the Tenant-Owner Cooperatives that Have Installed BAPV
5.3.1. Case Report 1
The first interview during step 2 of the study was with a TOC in which the executive board had a long-term strategy to reduce energy costs and place the cooperative’s economic status on more solid ground. They had approved a plan to install solar thermal and informed their district heating company about the changes they intended to make. However, due to clauses in the contract with the utility company, a reduction in the demand for district heating would not have led to lower costs. Therefore, the members of the executive chose to switch to BAPV instead. The size of the system was based on the roof space available. Contributing towards a sustainable environment was not one of the factors considered before the decision was taken to adopt BAPV. Two of the members on the executive board who are engineers by profession were strongly involved in the project and acted as “champions of the cause” as mentioned in the literature [
36] (p. 70). They lay behind most of the decisions taken in the executive board. The executive board chose to utilize a turnkey contract and outsourced the implementation process to a local firm. According to the board members, the principal-agent relationship with the contractor “
proceeded well and with a very high degree of trust between the partners”. From the responses, there is an indication that the board is doubtful whether a project manager from the nationwide organization to which this TOC is attached would have worked as well in this particular case. The fact that the entrepreneur was from the area and had many local contacts was found to be of importance in a number of situations.
The installation of the BAPV system was delayed by a number of challenges. The first one was that the municipality lacked routines for handling building permits for large-scale residential BAPV. The municipal architect refused to authorize the planned installation as the black BAPV panels would contrast too much with the red tiles on the roof. In order to overcome this obstacle, the members of the executive board advanced the changing of the roof tiles by five years, which increased the installation cost for the BAPV system by 25%. The second challenge was that according to the requirements for receiving the investment support, the installation had to be completed within the calendar year in which the application had been made. Because of the delay in receiving the building permit, the implementation process (procurement and installation) took longer than planned. Therefore, in order to start and complete the BAPV project within the duration of the subsidy, the executive board decided to skip the bidding process as a way of choosing the contractor. Unknown at the time was the fact that the government would later extend the period of the support by another three years, from December 2013 to December 2016. They estimate that bidding could have lowered the cost of the project by about 25% to 33%. Another consequence of the delay was that by the time the cooperative’s application for investment support was approved, the subsidy had been lowered from a level that reimbursed 45% of the total cost to a level that covered 35% of the total cost. Another of the challenges experienced by the TOC was in form of difficulties in acquiring the correct information from members of staff of the utility company with regard to the requirements for a grid connection. A consultant was hired to help the cooperative in this matter before the BAPV system was commissioned.
At the time of the meeting, the system had been functional for a number of months but the executive board had never carried out any investment analysis for BAPV. However, they had carried out one for the initially intended solar thermal project. According to the contractor, the BAPV system had a 10-year payback period. The fact that electricity prices had fallen and that the project costs had increased more than expected had not led the executive board to revise the expected payback period. Through the help of the contractor, the cooperative has acquired the various financial incentives available such as green electricity certificates and guarantees of origin. On commissioning the BAPV installation, the utility company categorized it as one small commercial system. The executive board has plans to register each building as a separate micro-producing residential BAPV system, as this would provide the TOC with more generous tariffs.
In summary, it can be noted that the main reason why the executive board in this TOC chose to adopt BAPV was to reduce operating costs, even though BAPV was not the initially intended energy-efficiency measure. To a great extent, the decision was in line with the property management priorities of the TOC. The installation work was outsourced to a turnkey entrepreneur that was chosen without any bidding process and the main challenges encountered during the implementation process were mainly due to lack of information about what is required by various actors, such as the utility company and the municipal authorities. The TOC overcame the barriers to the adoption of BAPV through the help of external advisors and the fact that there were persons on the executive board who were used to managing projects of a technical nature.
5.3.2. Case 2
This cooperative had a long-term maintenance plan in which the roof was to be changed as well as the electric wiring in all of the buildings. Three persons were delegated by the executive board to look into the most cost-efficient way of doing this. This subcommittee proposed the idea to install BAPV, based on the argument that the scaffolding for the roof renovation would already be in place, which would lower the cost of adopting BAPV. The members of the executive accepted the recommended measure and agreed upon how much the TOC would invest in the project. Two other reasons that weighed in favor of the decision to adopt BAPV were the wish to reduce the TOC’s operating costs as well as to make a contribution to a sustainable environment through lowering carbon dioxide emissions. Without requesting for bids from prospective contractors, the executive board awarded the contract to manage the projection and procurement of the BAPV system to a local firm that had installed rooftop BAPV on the office building of a company with ties to the cooperative movement. A member of the executive board, who is also the national organization’s representative, took on the role of building project manager for the BAPV installation.
The analysis of text documents revealed that the executive board in this TOC depends heavily on help from the attached national organization for technical guidance and during the interview it emerged that the idea to install BAPV had originated from the local office of the national organization. Procurement of the BAPV system took place one building at a time and was based on a fixed price per W. The equity sum that the executive board chose to invest in the project determined the size of the installed BAPV system. A decision was also taken that any subsidy, such as the investment support, was to be used to purchase more BAPV panels. The first solar panels were commissioned within a few months after the decision to adopt had been taken. According to the executive members, the fact that the subcontractors were also local firms was quite advantageous in getting the work done without major delays. The treasurer of the TOC was of the opinion that the choice by the executive board to use cost-reimbursable contracts instead of fixed-price contracts during the project helped the cooperative to hold the costs down. The installation of the BAPV system preceded the changing of the electric system, which was the activity originally planned for.
As large-scale BAPV installations in the municipality had previously only been on office or public service buildings, there was a lack of routines governing the process required in order to receive a building permit for large-scale residential BAPV. The members of the executive board became pioneers who worked hand in hand with municipal council staff in order to formulate, as well as fulfill, the necessary requirements. The board had an experienced contractor in charge of the project and members of the executive board who were knowledgeable and therefore, according to the respondents, most of the challenges encountered were beyond the control of the executive. One of the factors that the board members had taken into account before deciding to adopt BAPV, was that they would be able to utilize net metering in order to increase the profitability of the project. The members of the executive were disappointed that the government investigation on this issue had recommended another form of subsidy but they were hopeful that the government would still go ahead and permit net metering. Another measure taken by the executive board as a way of lowering the dwelling costs of the members in the cooperative was to see to it that the members voted for a change in the statutes to the effect that the cooperative became the sole purchaser of electricity for the dwellers. This measure, which had not come into effect by the time the interview took place, was intended to lower the fixed costs for the households who will still have individual metering but without each family having to pay the grid charge. According to the respondents, the adoption of BAPV has been a successful enterprise as the installation has generated nationwide publicity for the TOC. Despite the lack of a poll, they believe that the members of the cooperative are happy with the project.
At the time of the meeting, the various installations had been functional for about a year. Before starting the project, the board was provided with an investment analysis by the contractor. It showed that the project would be profitable even without the investment support. The analysis estimated an internal rate of return between 5% and 13% and a payback period of 8–13 years for the project depending on the support received. The investment support was 45% of the costs during the first year and 35% for the installations that followed. The executive board calculates on substantially lowering the operating costs but, as several of the parameters from the original investment analysis had changed since the start of the project, the respondents expressed an interest in getting a new and more detailed profitability analysis of the project.
In summary, it can be noted that the main reason for adopting BAPV was not due to a serious occasion that compelled the cooperative to adapt its energy consumption but an opportunistic action due to the need to utilize the scaffolding that had been put up in order to renovate the roof. The decision followed in the wake of maintenance measures that had been planned (reroofing and rewiring). However, the adoption of BAPV took place before one of the originally intended activities and the installation work was outsourced to a turnkey entrepreneur that was chosen without any bidding process. The main challenges encountered during the implementation process are related to the uncertainty about the conditions and policies governing the micro-production of renewable energy. The lack of major hindrances during the installation process was in part due to the help of external advisors.
5.3.3. Case 3
This cooperative planned to replace the worn-out electric heaters in each apartment with a more energy-efficient heating system and had analyzed several alternatives such as district heating and geothermal heat pumps. Due to special characteristics of the cooperative and its buildings, the most optimal solution was found to be the installation of an exhaust air heat pump system. As part of a long-term strategy, the executive board decided to install BAPV too, as this would further reduce the operation costs of the TOC and contribute to a sustainable environment. With the new installations, the heating cost would switch from individual to collective billing, and the electricity costs for the common areas would decrease. Members of the executive board hoped that the lower costs would contribute to a fall in the turnover rate of the dwellers at the same time as it would raise the value of the apartments. The BAPV system lies on top of the existing roof, which according to the maintenance plans of the cooperative is due to be changed in about six years’ time. In order to carry out the installation, the executive board took in bids for a turnkey contract after which they chose a small company from the region. The board relied heavily on assistance from its national organization in carrying out this selection. According to the interviewees, the members of the executive were satisfied with the contractor, with whom the cooperative had not had any previous relations. In its efforts to promote a sustainable environment, the executive board included a condition in the procurement specification, which required the contractor to use only solar panels manufactured in an environment friendly and ethical manner. The solar panels used are of German origin.
According to the interviewees, the executive board in this TOC experienced few challenges during the implementation process. The TOC is located close to the City hall in a small region where it is easy to meet spontaneously and the cooperative did not have any problems in getting the building permit. The greatest challenge reported was that over twenty-five firms put in bids for the installation contract. The consequence was that the shortlisting process had taken longer than what the members of the board had counted on. After adopting BAPV, the TOCs switched its electricity-trading partner to a company that offered incentives to tenant-owner cooperatives. However, the executive board signed a separate contract with another company that purchases the surplus electricity produced by the BAPV system. These changes went smoothly.
The executive board used the payback method in its investment analysis, which indicated a profitable return from the exhaust air heat pump, as well as the BAPV systems. Both are 100% debt-financed. However, the duration of the payback period was not the main factor behind in the decision to adopt BAPV. According to the chairperson: “a tenant-owner cooperative is a long term property owner and can afford to have an investment analysis based on a longer duration than that for a private owner”. The installation of the BAPV system led to another positive development in this tenant-owner cooperative. The long process that included a number of other maintenance activities necessitated regular meetings to provide the members with reports about the progress of the projects. This increased the sense of belonging and brought the dwellers socially closer together. The turnover rate decreased considerably and the members of the cooperative participate more in collective activities.
In summary, it can be noted that the main reason for adopting BAPV was due to the fact that the executive felt compelled to replace another depreciated installation. The decision was in that sense, in line with the property management priorities of the TOC. The installation work was outsourced to a turnkey entrepreneur that was chosen through a bidding process and the main challenges encountered were mainly due to the time the procurement process took.
6. Discussion and Concluding Remarks
In the literature, the adoption of energy-saving innovations has been shown to follow a given pattern that involves the occurrence of a serious situation that leads to the need for the innovation, acquiring information about the innovation, taking decisions about the innovation, implementing the decisions and evaluating the results [
11,
12]. The results of this study indicate that the main reason behind the desire and choice to install BAPV in the tenant-owner co-operative sector is the wish to lower operating costs. Most of the TOCs have electricity cost levels that lie high above the average for comparable properties and a need to make changes related to their demand for bought electricity. However, this is not always a priority in the maintenance plans. The decision to adopt BAPV appears to be based mainly on the opportunity to utilize it as a means of achieving some other goals, such as the promotion of the TOC and as a complement to an existing energy source, other than the replacement of an inefficient energy source. Due to lack of technical competence within the executive boards, the work to install the BAPV is outsourced to turnkey entrepreneurs.
A rational decision-making process is expected to lie behind the adoption of sustainable innovations by organizations and the existence of a corporate energy and/or environmental policy, as well as organizational provision for the implementation influences the decision [
12]. The results reveal that the reliability and technical fit of BAPV does not appear to be of concern and the TOCs that had decided to install BAPV (the adopters) were already past the implementation stage by the time the interviews were carried out. On the other hand, there appears to be a lack of detailed investment analysis of the profitability of the activity. Members of the executive boards in the three TOCs that have installed BAPV are contented with the measure as they can point to payback periods that are much shorter than the economic lifetime of the installed systems. However, in the absence of a serious occasion that highlights the need for the innovation, it can be logical to assume that the decision to adopt BAPV would not have taken place unless it was based on some other criteria. An approach based exclusively on economic reasoning does not provide sufficient grounds on which to adequately explain the behavior of the (potentially) adopting actors [
12]. The argument in the following section is that the decisions observed are rational but that they are the result of hidden incentives rather than strenuous efforts to achieve optimum economic gains for the tenant-owner cooperative. The agency theory, which provides a base for analyzing actions taken by different persons in a situation where a part of the execution is in the hands of an agent, is used to explain this standpoint.