Next Article in Journal
Use of Novel Composite Coagulants for Arsenic Removal from Waters—Experimental Insight for the Application of Polyferric Sulfate (PFS)
Previous Article in Journal
Redistributing Phosphorus in Animal Manure from a Livestock-Intensive Region to an Arable Region: Exploration of Environmental Consequences
Previous Article in Special Issue
Impacts of Global Warming and Sea Level Rise on Service Life of Chloride-Exposed Concrete Structures
Article Menu
Issue 4 (April) cover image

Export Article

Open AccessArticle
Sustainability 2017, 9(4), 591; doi:10.3390/su9040591

An ESCO Business Model Using CER for Buildings’ Energy Retrofit

1
Department of Architectural Engineering, Hanyang University, Seoul 133-791, Korea
2
Innovative Durable Building and Infrastructure Research Center, Hanyang University, Seoul 133-791, Korea
*
Author to whom correspondence should be addressed.
Academic Editor: Marc A. Rosen
Received: 20 January 2017 / Revised: 27 March 2017 / Accepted: 29 March 2017 / Published: 12 April 2017
View Full-Text   |   Download PDF [2326 KB, uploaded 12 April 2017]   |  

Abstract

This study proposes an Energy Service Company (ESCO) business model to which Certified Emission Reduction (CER) is applied mainly for guaranteed savings. To verify the effectiveness of this ESCO business model, option theory is used. Notably, along with call and put options, which are appropriate for profit structure evaluation of existing guaranteed savings contract, an up and knock-out option was used to analyze the option of securing profit from CER. Based on this analysis, the values of the guarantee acquired by an energy user from the change in the amount of energy savings and the values of an ESCO’s right to profit from energy savings and CER, were calculated. Through these valuations, the profit sharing ratio between energy users and the ESCO was estimated. When the model proposed in this paper was applied to a project case, the profit sharing ratio was 16.37%. The model proposed in this paper is useful for motivating ESCOs to save more energy during operating periods by effectively using profit from CER. Additionally, this model will contribute to the expansion of ESCO market and the effectiveness of energy performance projects in Korea. View Full-Text
Keywords: ESCO; Guaranteed Savings Contract; Certified Emission reduction; real options ESCO; Guaranteed Savings Contract; Certified Emission reduction; real options
Figures

Figure 1

This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

Scifeed alert for new publications

Never miss any articles matching your research from any publisher
  • Get alerts for new papers matching your research
  • Find out the new papers from selected authors
  • Updated daily for 49'000+ journals and 6000+ publishers
  • Define your Scifeed now

SciFeed Share & Cite This Article

MDPI and ACS Style

Yi, H.; Lee, S.; Kim, J. An ESCO Business Model Using CER for Buildings’ Energy Retrofit. Sustainability 2017, 9, 591.

Show more citation formats Show less citations formats

Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Related Articles

Article Metrics

Article Access Statistics

1

Comments

[Return to top]
Sustainability EISSN 2071-1050 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
Back to Top