Dynamic Feedback Analysis of Influencing Factors of Existing Building Energy-Saving Renovation Market Based on System Dynamics in China
2. Literature Review
3.1. Determination of the Boundary
3.2. Identification of the Influencing Factors
3.3. Construction of Dynamic Feedback Model
- Use curves to represent information feedback. This helps readers form a visual image.
- Let the important circuit follow a circular or elliptical path.
- Organize your maps reasonably to minimize cross lines.
- Try again and again. Redraw multiple times to find the best layout.
3.4. Feedback Loop Analysis of the Subsystem
3.5. Characteristics Analysis of Dynamic Feedback System
4.1. The Framework of the Existing Building Energy-Saving Renovation Market
4.2. Building the Total System Causal Diagram
4.3. Results of Dynamic Feedback Analysis
4.3.1. Service Market Subsystem Loop Analysis
4.3.2. Demand Market Subsystem Loop Analysis
4.3.3. Variable Tree Structure of Market Regulation Subsystem Analysis
4.4. Characteristics Analysis of Dynamic Feedback System
- The research results indicate that “ESCO’s revenue” is perceived to be an important influencing factor in the dynamic feedback. This finding supports previous research that with the revenue increase, the number of ESCO in the market shows an upward trend. In fact, all rational economic entities are profit-oriented. When ESCO’s revenue does not reach the expected profit, ESCO’s competition mechanism and industry scale will degenerate, and market development has the largest size constraint. In addition, the increase in earnings makes ESCO more willing to transform energy-saving, which makes the number of ESCOs in the market increase significantly. At this time, the existing buildings energy-saving renovation market has developed rapidly. Therefore, to achieve successful and widespread adoption of existing building energy-saving reconstruction, the government should take appropriate economic subsidy measures in order to improve ESCO’s income.
- As expected, technological innovation is an important influencing factor in the dynamic feedback to maintain competitiveness. On the one hand, enterprises improve service efficiency by developing new technologies, and reduce project management costs with high quality service level, thereby increasing energy-saving benefits. On the other hand, ESCO attaches great importance to technological innovation, which can change the focus of enterprise competition and pursue maximum benefit with minimum investment. Therefore, in order to ensure the sustainable development of the existing buildings energy-saving reconstruction market, it is wise to pursue technological innovation as the focus to improve economic benefits.
- As a critical influencing factor to implementing existing buildings energy-saving renovation in China, “the willingness of stakeholders to participate” has attracted the attention of scholars. Many scholars found that while existing building energy-saving renovation has the attributes of public good, part of the main body of the market exhibits the behavior of “free riding”, and so weaken the enthusiasm of other stakeholders. Therefore, in order to break the negative stable state, it is necessary for the government to implement appropriate policy measures to improve the recognition of energy-saving renovation, so as to make it easier for potential demand to be converted into explicit demand.
- Government incentives are as important as perceived and can be found in the results obtained from the dynamic feedback. Previous studies have pointed out that there are special properties such as externality in existing building energy-saving reconstruction. This determines that the healthy development of its market is bound to be inseparable from the external engine of the government. The government is the leading force in the existing building energy-saving reconstruction market. It has been a consensus among Chinese scholars that incentive policies are effective measures to solve externalities. The degree of incentive is closely related to the benefits of energy income. In addition, energy-saving propaganda and administrative supervision have also been affirmed. Through these means, the owners’ and ESCO’s willingness to support energy-saving reconstruction have been stimulated effectively and the market has become more active.
- An interesting finding is that owner energy-saving awareness has become very important in the dynamic feedback. Currently, the knowledge and understanding of existing building energy-saving reconstruction by the public needs to be further promoted. Although an increasing amount of the public recognized that energy-saving is a serious issue, it is difficult for them to take this social problem into their own hands. Especially in the current building market environment, very few people are willing to change the current situation, even if existing buildings are energy-intensive. In addition, due to lack of awareness about existing building energy-saving reconstruction, it is difficult to control the owner’s energy use behavior in the operation process of energy-saving transformation. Ultimately, the energy-saving cannot be realized and the cost has not been reduced.
- Promote the market-oriented development model of “market-led, government-regulated”. Because the existing building energy-saving retrofit market has externalities, information asymmetry, insufficient explicit demand, and high capital barriers, the government should play a key role and adopt various means to support enterprises, owners, and investors to participate in the market. The specific measures are to establish a market access and exit mechanism for existing building energy-saving renovation to enhance the enterprise’s competition awareness. Further, the government should improve the industry’s supervision system for energy-saving renovation, to promote cooperation and exchanges, improve the system of regulations and standards, provide a stable development environment, and accelerate the transformation of government functions and coordinate the allocation of market resources.
- Optimize the composition of the factor market and support the sustainable development of the market. Optimizing the composition of the factor market is the necessary condition to realize the sustainable development of the existing building energy-saving reconstruction market. To achieve this goal, we need to optimize the labor market talent composition, expand financing channels, and build information exchange platforms within the industry. In addition, it is necessary to optimize the labor market composition and increase the proportion of professionals, promote financial product innovation, expand enterprise financing channels, and build information exchange platforms to reduce market transaction costs.
- Guided by market demand, it is necessary to promote technological innovation of energy-saving service enterprises. First of all, through rapid and accurate information diffusion, the information on the technical needs of the existing building energy-saving transformation market will be conveyed to enterprises to avoid information asymmetry, so that enterprises can fully grasp the market demand situation. Secondly, it is necessary to increase investment in basic research involved in energy-saving renovation of existing buildings, and the state must support enterprises and research institutes to cooperate in scientific research to form original capabilities. Third, the state formulate corresponding industrial policies and technical policies, reduce the cost of enterprise innovation, and guide enterprises to form innovative capabilities. Finally, the state establish a building energy-saving product certification system, standardize the technology transfer market, promote technology exchange and integration between enterprises, enhance the overall production and service level of the industry, and promote the stable development of the market.
Conflicts of Interest
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Guo, H.; Qiao, W.; Liu, J. Dynamic Feedback Analysis of Influencing Factors of Existing Building Energy-Saving Renovation Market Based on System Dynamics in China. Sustainability 2019, 11, 273. https://doi.org/10.3390/su11010273
Guo H, Qiao W, Liu J. Dynamic Feedback Analysis of Influencing Factors of Existing Building Energy-Saving Renovation Market Based on System Dynamics in China. Sustainability. 2019; 11(1):273. https://doi.org/10.3390/su11010273Chicago/Turabian Style
Guo, Handing, Wanzhen Qiao, and Jiren Liu. 2019. "Dynamic Feedback Analysis of Influencing Factors of Existing Building Energy-Saving Renovation Market Based on System Dynamics in China" Sustainability 11, no. 1: 273. https://doi.org/10.3390/su11010273