Energy performance contracting (EPC) has been commonly regarded as a critical and valuable energy conservation mechanism in urban development, under which an energy service company (ESCO) provides an energy-saving service to the energy user (EU) and shares the energy cost-savings with EUs together [1
]. The EPC mechanism has been proven to be applicable and beneficial to diverse sectors typically including iron, steel, coal, chemical, buildings, electricity, and energy [5
]. Over the last decade, with a major initiative being energy conservation, a lot of EPC-related studies have been published in scholarly journals due to the perceived benefits of effectively promoting energy efficiency [3
]. While these studies contribute significantly to the knowledge of energy management, they present a challenge for scholars to grasp an overview of EPC research. It is difficult to learn and understand the research progress in EPC field because of the dramatic increase of the publications in a short period. Therefore, it is of vital importance to systematically investigate the EPC-related literature, which would be helpful in inspiring and guiding future research trends on the subject.
Literature review has long been adopted as a useful methodology for examining the development trend of research in a particular discipline. For example, Felix and Stefan [11
] reviewed the terms of air cargo loading and identified the gaps between the current planning practice and research. To identify different parameters for measuring embodied energy, Materla et al. [12
] analyzed existing literature on the Kano model and provided a valuable guide to further research in service quality improvement of the healthcare industry. With a review on construction and demolition waste (CDW) management research published in eight international journals, Yuan and Shen [13
] informed several research trends of CDW management worth further investigations. Based on over 180 publications, Volk et al. [14
] conducted a systematic literature review of BIM, which was claimed to be effective in revealing current trends and research gaps in the area. Jin et al. [15
] carried out a review-based study for evaluating the recent decade’s construction waste management research and proposed a framework for guiding near-future research in the area. Obviously, the above review-based studies have provided researchers with complete understanding on the current development of research, and guided new researchers intending to launch new studies to avoid duplication of research efforts. Also, those review outcomes have presented new and noteworthy research directions. Therefore, review-based research is important to allow researchers to learn the current research progress and the potential research trends in a research subject concerned.
In the field of EPC, very few review-based studies were spotted based on a thorough literature search and scan. A recent study by Shang et al. [16
] is one among such attempts. Their study, based on an analysis of EPC-related research, reviewed mainly four aspects: (1) different characteristics of EPC business models (EPCBMs), (2) EPCBM selecting methods, (3) the impact of EPCBMs on EPC project performance, and (4) critical factors affecting the EPCBM selection. It is apparent that their focus is on the EPCBMs (i.e., Shared Savings Model, Guaranteed Saving Model, and Chaffee Model in their study), instead of analyzing EPC literature in a broad sense. Therefore, no comprehensive EPC review has been conducted for understanding latest research progress and arousing future research trends.
To fill the above research gap, this study is carried out to discuss latest research and present future research trends on EPC by extensively reviewing relevant publications from 2008 to 2018. Specifically, the following questions are to be answered.
(1) What themes or topics of EPC research had been put attentions by scholars in the past decade?
(2) What research methods and data analysis methods were primarily adopted in EPC studies from 2008 to 2018?
(3) What can be the potential research trend of EPC research in future?
The paper is organized as follows. In Section 2
, we will brief the research on EPC; then we will introduce the research methodology, such as how to select the target documents and papers and how to classify the identified papers. In Section 4
, the results will be presented with detailed analyses and discussions, including EPC publication trends in the past decade and a discussion of research methods and data analysis methods and the major EPC research topics. Section 5
will present future research trends in EPC; finally, we will conclude the paper.
2. Overview of Energy Performance Contracting
Originated from the oil crisis in 1970s, EPC was created as an innovative financing mode mainly for reducing energy consumption through recompose for costs of installing and managing energy-saving equipment [17
]. EPC nowadays has been widely applied in various industries for energy conservation and received widespread attention from scholars [4
]. In the context of construction industry for instance, EPC is perceived as a market mechanism or financing tool to encourage building owners to carry out energy retrofits [7
]. Under such a mechanism, an ESCO normally provides EU with a series of energy-saving products or services, including energy auditing, EPC financing, energy-saving designing, equipment purchasing, and energy accounting [4
]. Quite different from traditional mechanisms, the ESCO mainly profits from EPC projects through bearing energy-saving costs and sharing energy retrofit benefits with the EU [18
Along with the emerging policies and standards for encouraging EPC, worldwide EPC markets have been developing rapidly over the past decade, though with different stages of market maturity. The great variation of EPC market development among different countries and regions has been evident that USA’s EPC market has experienced a rapid growth since 2000, while the whole development of EPC in European and Asian regions is much slower [10
]. The sectors for EPC application are also quite different. In many developed countries, such as USA, Japan, Canada, UK, Finland, and Australia, EPC is mainly adopted for building energy-efficiency retrofits (see: [2
]). However, in some developing countries, such as China, EPC is primarily applied in coal, iron and steel [4
], paper-making [25
], and building sectors [26
]. Such a difference in EPC application can be related to the particular socioeconomic context of the countries concerned.
A major concern about applying EPC is how to promote EPC successfully in a given market. In this regard, several research efforts have been devoted to barriers of applying EPC, particularly in some emerging markets. For example, Painuly et al. [26
] examined the EPC mechanisms and ESCOs’ financing barriers in developing countries. Studies of Xu et al. [6
] and Xu and Chan [27
] attempted to explore major factors affecting the sustainable building energy efficiency retrofit of hotel buildings in China. Zhang et al. [10
] proposed a framework for applying EPC in the real estate industry. From a qualitative perspective, Yuan et al. [28
] analyzed the status and future of EPC through investigating the evolution of EPC policy system in China. Aasen et al. [29
] explored the important factors affecting the EPC and the barriers to energy savings in Norway’s municipal sector. Polzin et al. [23
] empirically studied the EPC barriers in the retrofitting projects in German municipalities.
With the above barriers unsolved, the operation and development of EPC projects would encounter a set of risks and uncertainties, which are influential to project success [30
]. Hu and Zhou [31
] summarized major risks in EPC project development, including the political and legal risks, technology-related risks, management risks, financial risks, project quality risks, and client-related risks. Qian and Guo [32
] pointed out that risks and uncertainties in EPC projects are largely related to energy prices, equipment utilization, unexpected events, contract risks, and so on. Based on empirical evidence, Lee et al. [33
] identified the critical risks in EPC projects, such as the EU’s potential payment default after installation, inaccuracy of baseline measurement, and increase in installation cost. Besides, the literature also suggested other risks that decision-makers in EPC projects should be aware of, such as low awareness and consciousness of EPC project development [34
], technical barriers and risks [36
], and insufficient policy supports for applying EPC [28
EPC is a turnkey service providing clients with a general overview of energy efficiency, renewable energy, and distributed generation measures, which are always accompanied with energy savings guarantees. In EPC projects, the project energy savings fulfill all initial investment [7
]. Therefore, financing has been a core element in EPC projects. Sarkar and Singh [38
] discussed the critical financing factors affecting EPC energy-saving solutions in major developing countries. Li [5
] evaluated the financing problems in China’s EPC projects with an AHP-Fuzzy approach; particularly, the financing problems in five industries were targeted, including iron, steel, chemical, building, electricity, and energy. Li et al. [25
] highlighted the importance of effective financing to EPC projects development through exploring the detailed clauses of Chinese EPC projects.
EPC provides a cooperative mechanism between ESCOs and EUs [4
]. As an integral component of EPC, ESCO has been playing a critical role in affecting the operation and development of EPC projects [39
]. Based on information in 38 countries outside of the US, Vine [1
] provided a comprehensive analysis of ESCO development mainly covering the number of ESCOs, the significant sectors targeted by ESCOs, the major important barriers in ESCO industry, and the future of the ESCO industry in a particular country. Based on discussion and analysis of the current status of ESCO industries in the EU and the New Accession Countries, Bertoldi et al. [40
] developed a long-term strategy to support the development of ESCOs in Europe. Based on a model analysis by using on a panel data of 94 countries from 1981 to 2007, Fang et al. [41
] proved that ESCOs reduce energy use effectively. Through an analysis of the EPC market institutions in China, Kostka and Shin [42
] argued that trust-based relationship between ESCO and EU is essential for successful implementation and operation of EPC projects. In the study of Deng et al. [43
], a methodology was advocated to assist ESCOs to keep competitiveness in winning bids, which was claimed to be effective in finding the reasonable guaranteed savings value in EPC projects. Using a game-theoretic model, Zhou et al. [4
] investigated the competitiveness of two competing manufacturers with EPC mode.
Increasing demand of applying energy performance contracting (EPC) for energy retrofits and conservation has resulted in a significant amount of publications over the past decade. Employing a review-based approach, this paper provides a holistic view on the research in EPC through analyzing 127 journal papers published from 2008 to 2018. Based on the analysis and discussion, the major EPC research trends were identified. The main conclusions of this paper are as follows.
In the past decade, there is a trend of gradually increasing research interests in EPC issues.
Our findings reveal that the case study, theoretical/mathematical analysis, and survey were almost equally applied in EPC research in the past decade. Modeling and simulation methods, descriptive analysis, and statistical analysis are the three major clusters of methods for data analysis.
The thorough review of the sample papers identifies five major topics among existing EPC research over the past decade, which include ‘implementation of EPC projects’, ‘EPC mechanism and business models’, ‘decision-making in EPC projects’, ‘ESCOs in EPC projects’, and ‘risk management in EPC projects’. Among them, the two topics of ‘implementations of EPC’ and ‘EPC mechanism and business models’ have been dominant.
Based on the analysis of the five EPC research topics, the future research directions/trends are proposed and discussed. The trends of EPC research in future cover five directions and twelve subtopics in total. Firstly, three research trends exist on the topic of “implementation of EPC projects”, including ‘An effective system for measuring and verifying the performance of energy saving through EPC’, ‘Application of EPC in the residential sector’, and ‘The government’s role in promoting EPC application’. Secondly, two directions of “EPC mechanism and business models”, covering ‘Better mechanism of applying EPC’ and ‘Optimal choice of EPC business models’. Thirdly, trends of “decision-making in EPC projects” are ‘Cooperative and opportunistic behaviors and decisions in EPC projects’, ‘How would new stakeholders reshape decision-makings in EPC projects’ and ‘The influence of symmetric/asymmetric information on decision-making in EPC projects’. Fourthly, there are two directions of “ESCOs in EPC projects”, including ‘How to improve the EU’s attitudes/cognitions toward the ESCO and EPC application’ and ‘How to develop appropriate ESCO operating models’. Finally, two directions in topic of “risk management in EPC projects” are ‘How to effectively prevent risks in EPC projects’ and ‘How to deal with EPC project risks from a systematic perspective’.
The findings can be informative and useful for both EPC researchers and practitioners. For researchers, the work of this paper can be valuable for guiding future research in EPC, and would be particularly helpful for researchers who are keen to open a new window of investigating EPC issues. As for practitioners, they can understand the latest research interests in EPC issues, through which to bridge their practice with research for enhancing the practices.
Nevertheless, there are also limitations for the present study. Firstly, it is appreciated that 127 papers referred herein may not contain all related publications of EPC from 2008 to 2018, although those journal papers are representative to reflect the general trend of EPC research. Secondly, in this study, we mainly use context analysis to facilitate the literature analysis. There is a trend that some scholars are beginning to use bibliometric analysis to show the complex relationships among major papers in a specific subject. Thus, it would be valuable to expand this research by a bibliometric analysis method in the future.