IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v16y2023i11p4261-d1153326.html
   My bibliography  Save this article

Roadmap to a Sustainable Energy System: Is Uncertainty a Major Barrier to Investments for Building Energy Retrofit Projects in Wide City Compartments?

Author

Listed:
  • Laura Gabrielli

    (Department of Architecture and Arts, University IUAV of Venice, Dorsoduro 2206, 30123 Venice, Italy)

  • Aurora Greta Ruggeri

    (Department of Architecture and Arts, University IUAV of Venice, Dorsoduro 2206, 30123 Venice, Italy)

  • Massimiliano Scarpa

    (Department of Architecture and Arts, University IUAV of Venice, Dorsoduro 2206, 30123 Venice, Italy)

Abstract

Along the roadmap to a Sustainable Real Estate-Scape, energy retrofit campaigns on wide city compartments represent a pivotal task, where the importance of the collaboration between the public and private sectors is crucial. Energy retrofit programs on building assets are subject to multiple uncertainty factors (e.g., climate, energy-economy forecasts, etc.) that act as a primary barrier to investment in this field. This paper aims to discuss risk management techniques to understand better how to deal with this kind of uncertainty. The research specifically addresses the techniques of sensitivity analysis and Monte Carlo simulation, focusing first on the phase of variables selection and their probability definition, including climatic, environmental, energy, economic, financial, and stochastic parameters. In this article, it is suggested to include correlation coefficients in the input variables of risk analysis, preferring the two-dimension Monte Carlo simulation to its simple version, since the results are more reliable when separating aleatory from epistemic uncertainty; thus, the results are more reliable. Moreover, it is seen how a sensitivity analysis based on percentile variations of the inputs provides a more accurate representation of risk if compared to the most common sensitivity analysis based on percentage deviations of the inputs. Conducting a sensitivity analysis using percentile variations gives realistic and reliable results, reflecting the tailored definition of uncertainty around the inputs on the basis of specific market analyses or historical series.

Suggested Citation

  • Laura Gabrielli & Aurora Greta Ruggeri & Massimiliano Scarpa, 2023. "Roadmap to a Sustainable Energy System: Is Uncertainty a Major Barrier to Investments for Building Energy Retrofit Projects in Wide City Compartments?," Energies, MDPI, vol. 16(11), pages 1-21, May.
  • Handle: RePEc:gam:jeners:v:16:y:2023:i:11:p:4261-:d:1153326
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/16/11/4261/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/1996-1073/16/11/4261/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Junyu Zheng & H. Christopher Frey, 2005. "Quantitative Analysis of Variability and Uncertainty with Known Measurement Error: Methodology and Case Study," Risk Analysis, John Wiley & Sons, vol. 25(3), pages 663-675, June.
    2. Gillich, Aaron & Saber, Esmail Mahmoudi & Mohareb, Eugene, 2019. "Limits and uncertainty for energy efficiency in the UK housing stock," Energy Policy, Elsevier, vol. 133(C).
    3. Loup Rimbaud & Fanny Heraud & Sébastien La Vieille & Jean‐Charles Leblanc & Amélie Crepet, 2010. "Quantitative Risk Assessment Relating to Adventitious Presence of Allergens in Food: A Probabilistic Model Applied to Peanut in Chocolate," Risk Analysis, John Wiley & Sons, vol. 30(1), pages 7-19, January.
    4. Nick French & Laura Gabrielli, 2006. "Uncertainty and feasibility studies: an Italian case study," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 24(1), pages 49-67, January.
    5. Xin Liang & Geoffrey Qiping Shen & Li Guo, 2019. "Optimizing Incentive Policy of Energy-Efficiency Retrofit in Public Buildings: A Principal-Agent Model," Sustainability, MDPI, vol. 11(12), pages 1-19, June.
    6. Galym Tokazhanov & Aidana Tleuken & Mert Guney & Ali Turkyilmaz & Ferhat Karaca, 2020. "How is COVID-19 Experience Transforming Sustainability Requirements of Residential Buildings? A Review," Sustainability, MDPI, vol. 12(20), pages 1-20, October.
    7. Jeon, Chanwoong & Shin, Juneseuk, 2014. "Long-term renewable energy technology valuation using system dynamics and Monte Carlo simulation: Photovoltaic technology case," Energy, Elsevier, vol. 66(C), pages 447-457.
    8. Sun, Kaiyu & Hong, Tianzhen & Taylor-Lange, Sarah C. & Piette, Mary Ann, 2016. "A pattern-based automated approach to building energy model calibration," Applied Energy, Elsevier, vol. 165(C), pages 214-224.
    9. Kemp, Alexander G. & Stephen, Linda, 1999. "Price, cost and exploration sensitivities of prospective activity levels in the UKCS: an application of the Monte Carlo technique," Energy Policy, Elsevier, vol. 27(13), pages 801-810, November.
    10. Cezar-Petre Simion & Ciprian Nicolescu & Mihai Cioc, 2018. "Selection of Energy Efficiency Projects for Dwelling Stock to Achieve Optimal Project Portfolio at the Regional Level by Applying LCC. An Analysis Based on Three Scenarios in the South-Muntenia Region," Energies, MDPI, vol. 11(6), pages 1-21, June.
    11. Remer, Donald S. & Nieto, Armando P., 1995. "A compendium and comparison of 25 project evaluation techniques. Part 2: Ratio, payback, and accounting methods," International Journal of Production Economics, Elsevier, vol. 42(2), pages 101-129, December.
    12. Eric J. Boyer, 2019. "How does public participation affect perceptions of public–private partnerships? A citizens’ view on push, pull, and network approaches in PPPs," Public Management Review, Taylor & Francis Journals, vol. 21(10), pages 1464-1485, October.
    13. Belaïd, Fateh & Ranjbar, Zeinab & Massié, Camille, 2021. "Exploring the cost-effectiveness of energy efficiency implementation measures in the residential sector," Energy Policy, Elsevier, vol. 150(C).
    14. Eguaras-Martínez, María & Vidaurre-Arbizu, Marina & Martín-Gómez, César, 2014. "Simulation and evaluation of Building Information Modeling in a real pilot site," Applied Energy, Elsevier, vol. 114(C), pages 475-484.
    15. Remer, Donald S. & Nieto, Armando P., 1995. "A compendium and comparison of 25 project evaluation techniques. Part 1: Net present value and rate of return methods," International Journal of Production Economics, Elsevier, vol. 42(1), pages 79-96, November.
    16. Aurora Greta Ruggeri & Laura Gabrielli & Massimiliano Scarpa, 2020. "Energy Retrofit in European Building Portfolios: A Review of Five Key Aspects," Sustainability, MDPI, vol. 12(18), pages 1-38, September.
    17. Nick French & Laura Gabrielli, 2005. "Discounted cash flow: accounting for uncertainty," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 23(1), pages 75-89, February.
    18. Trojanek, Radoslaw & Gluszak, Michal, 2022. "Short-run impact of the Ukrainian refugee crisis on the housing market in Poland," Finance Research Letters, Elsevier, vol. 50(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jeong-Heum Cho & Sangmu Bae & Yujin Nam, 2023. "Analysis of the Energy and Economic Effects of Green Remodeling for Old Buildings: A Case Study of Public Daycare Centers in South Korea," Energies, MDPI, vol. 16(13), pages 1-25, June.
    2. Andrea Sarcina & Rubina Canesi, 2023. "Renewable Energy Community: Opportunities and Threats towards Green Transition," Sustainability, MDPI, vol. 15(18), pages 1-21, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aurora Greta Ruggeri & Laura Gabrielli & Massimiliano Scarpa, 2020. "Energy Retrofit in European Building Portfolios: A Review of Five Key Aspects," Sustainability, MDPI, vol. 12(18), pages 1-38, September.
    2. Sommerfeldt, Nelson & Madani, Hatef, 2017. "Revisiting the techno-economic analysis process for building-mounted, grid-connected solar photovoltaic systems: Part one – Review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 74(C), pages 1379-1393.
    3. Copiello, Sergio & Gabrielli, Laura & Bonifaci, Pietro, 2017. "Evaluation of energy retrofit in buildings under conditions of uncertainty: The prominence of the discount rate," Energy, Elsevier, vol. 137(C), pages 104-117.
    4. Sommerfeldt, Nelson & Madani, Hatef, 2017. "Revisiting the techno-economic analysis process for building-mounted, grid-connected solar photovoltaic systems: Part two - Application," Renewable and Sustainable Energy Reviews, Elsevier, vol. 74(C), pages 1394-1404.
    5. Magni, Carlo Alberto, 2016. "Capital depreciation and the underdetermination of rate of return: A unifying perspective," Journal of Mathematical Economics, Elsevier, vol. 67(C), pages 54-79.
    6. Dodoo, Ambrose & Gustavsson, Leif & Tettey, Uniben Y.A., 2017. "Final energy savings and cost-effectiveness of deep energy renovation of a multi-storey residential building," Energy, Elsevier, vol. 135(C), pages 563-576.
    7. Cuthbert, James R. & Magni, Carlo Alberto, 2016. "Measuring the inadequacy of IRR in PFI schemes using profitability index and AIRR," International Journal of Production Economics, Elsevier, vol. 179(C), pages 130-140.
    8. García Kerdan, Iván & Raslan, Rokia & Ruyssevelt, Paul & Morillón Gálvez, David, 2017. "A comparison of an energy/economic-based against an exergoeconomic-based multi-objective optimisation for low carbon building energy design," Energy, Elsevier, vol. 128(C), pages 244-263.
    9. Carlo Alberto Magni & Ken V. Peasnell, 2015. "The Term Structure of Capital Values:An accounting-based framework for measuring economic profitability," Department of Economics 0060, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
    10. Hosseininasab, Amin & Ahmadi, Abbas, 2015. "Selecting a supplier portfolio with value, development, and risk consideration," European Journal of Operational Research, Elsevier, vol. 245(1), pages 146-156.
    11. Laura Gabrielli & Aurora Greta Ruggeri & Massimiliano Scarpa, 2023. "“Location, Location, Location”: Fluctuations in Real Estate Market Values after COVID-19 and the War in Ukraine Based on Econometric and Spatial Analysis, Random Forest, and Multivariate Regression," Land, MDPI, vol. 12(6), pages 1-23, June.
    12. Yasser Alizadeh & Antonie J. Jetter, 2019. "Pathways for Balancing Exploration and Exploitation in Innovations: A Review and Expansion of Ambidexterity Theory," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 16(05), pages 1-33, August.
    13. Ekaterina Makarova & Anna Sokolova, 2012. "The Best Practices of Evaluating S&T Foresight: Basic Elements and Key Criteria," Foresight and STI Governance (Foresight-Russia till No. 3/2015), National Research University Higher School of Economics, vol. 6(3), pages 62-74.
    14. Cuéllar-Franca, Rosa & García-Gutiérrez, Pelayo & Dimitriou, Ioanna & Elder, Rachael H. & Allen, Ray W.K. & Azapagic, Adisa, 2019. "Utilising carbon dioxide for transport fuels: The economic and environmental sustainability of different Fischer-Tropsch process designs," Applied Energy, Elsevier, vol. 253(C), pages 1-1.
    15. Man Ying (Annie) Ho & Joseph H. K. Lai & Huiying (Cynthia) Hou & Dadi Zhang, 2021. "Key Performance Indicators for Evaluation of Commercial Building Retrofits: Shortlisting via an Industry Survey," Energies, MDPI, vol. 14(21), pages 1-30, November.
    16. Joan Carles FERRER-COMALAT & Salvador LINARES-MUSTAROS & Dolors COROMINAS-COLL, 2016. "A Model For Optimal Investment Project Choice Using Fuzzy Probability," ECONOMIC COMPUTATION AND ECONOMIC CYBERNETICS STUDIES AND RESEARCH, Faculty of Economic Cybernetics, Statistics and Informatics, vol. 50(4), pages 187-203.
    17. Morelli, Martin & Harrestrup, Maria & Svendsen, Svend, 2014. "Method for a component-based economic optimisation in design of whole building renovation versus demolishing and rebuilding," Energy Policy, Elsevier, vol. 65(C), pages 305-314.
    18. Ekaterina Makarova & Anna Sokolova, 2012. "Foresight Evaluation: Lessons from Project Management," HSE Working papers WP BRP 01/MAN/2012, National Research University Higher School of Economics.
    19. An, Jingjing & Yan, Da & Hong, Tianzhen & Sun, Kaiyu, 2017. "A novel stochastic modeling method to simulate cooling loads in residential districts," Applied Energy, Elsevier, vol. 206(C), pages 134-149.
    20. Petersen, Steffen & Svendsen, Svend, 2012. "Method for component-based economical optimisation for use in design of new low-energy buildings," Renewable Energy, Elsevier, vol. 38(1), pages 173-180.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:16:y:2023:i:11:p:4261-:d:1153326. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.