IDEAS home Printed from https://ideas.repec.org/a/spr/operea/v22y2022i1d10.1007_s12351-020-00566-6.html
   My bibliography  Save this article

Investment planning in energy efficiency programs: a portfolio based approach

Author

Listed:
  • Carla Oliveira Henriques

    (Polytechnic Institute of Coimbra
    INESCC)

  • Dulce Helena Coelho

    (INESCC
    Polytechnic Institute of Coimbra)

  • Maria Elisabete Duarte Neves

    (Polytechnic Institute of Coimbra
    CETRAD-UTAD)

Abstract

The Portuguese energy efficiency programs are usually run through grant awards that support energy efficient technologies, which require the establishment of rational investment plans considering distinct budget level inputs to each program. The current evaluation of energy efficiency programs mainly relies on the economic analysis of demand-side programs and projects. One of the weaknesses of this type of approach is that it cannot capture the complexities of decision-making processes, mainly relying on the device costs targeted for funding. This paper aims at developing a methodological framework to support public authorities in investment planning for energy efficiency programs based on portfolio theory explicitly considering the energy spent in the manufacturing and installation of each energy efficient technology. The applicability of the methodology herein proposed is illustrated by considering the potential investment in distinct portfolios of industrial lighting systems. Finally, a new solution methodology for computing possibly efficient solutions is also suggested which allows exploring distinct types of investment strategies, according to the public investor’s preferences. Our findings suggest that LED lamps and T5 technologies should be considered as a valid option for replacing T8 and HPS technologies. Additionally, despite the investment cost involved in the installation of light control systems, they should be elected for funding. Finally, it is worth mentioning that the substitution of T8 and Halogen lamps with LED lamps has never been considered with the modelling framework used in spite of being effectively selected for public support, highlighting the need of adopting approaches that encompass a life-cycle perspective.

Suggested Citation

  • Carla Oliveira Henriques & Dulce Helena Coelho & Maria Elisabete Duarte Neves, 2022. "Investment planning in energy efficiency programs: a portfolio based approach," Operational Research, Springer, vol. 22(1), pages 615-649, March.
    • Handle: RePEc:spr:operea:v:22:y:2022:i:1:d:10.1007_s12351-020-00566-6
    DOI: 10.1007/s12351-020-00566-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s12351-020-00566-6
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s12351-020-00566-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. R. E. Bellman & L. A. Zadeh, 1970. "Decision-Making in a Fuzzy Environment," Management Science, INFORMS, vol. 17(4), pages 141-164, December.
    2. de Carvalho, Ariovaldo Lopes & Henggeler Antunes, Carlos & Freire, Fausto & Oliveira Henriques, Carla, 2016. "A multi-objective interactive approach to assess economic-energy-environment trade-offs in Brazil," Renewable and Sustainable Energy Reviews, Elsevier, vol. 54(C), pages 1429-1442.
    3. Henriques, C.O. & Luque, M. & Marcenaro-Gutierrez, O.D. & Lopez-Agudo, L.A., 2019. "A multiobjective interval programming model to explore the trade-offs among different aspects of job satisfaction under different scenarios," Socio-Economic Planning Sciences, Elsevier, vol. 66(C), pages 35-46.
    4. Jorge Vendries Algarin & Troy R. Hawkins & Joe Marriott & H. Scott Matthews & Vikas Khanna, 2015. "Disaggregating the Power Generation Sector for Input-Output Life Cycle Assessment," Journal of Industrial Ecology, Yale University, vol. 19(4), pages 666-675, August.
    5. Neves, Lui­s Pires & Martins, António Gomes & Antunes, Carlos Henggeler & Dias, Lui­s Cândido, 2008. "A multi-criteria decision approach to sorting actions for promoting energy efficiency," Energy Policy, Elsevier, vol. 36(7), pages 2351-2363, July.
    6. Scheepmaker, Gerben M. & Goverde, Rob M.P. & Kroon, Leo G., 2017. "Review of energy-efficient train control and timetabling," European Journal of Operational Research, Elsevier, vol. 257(2), pages 355-376.
    7. Lehr, Ulrike & Nitsch, Joachim & Kratzat, Marlene & Lutz, Christian & Edler, Dietmar, 2008. "Renewable energy and employment in Germany," Energy Policy, Elsevier, vol. 36(1), pages 108-117, January.
    8. Llorca, Manuel & Jamasb, Tooraj, 2017. "Energy efficiency and rebound effect in European road freight transport," Transportation Research Part A: Policy and Practice, Elsevier, vol. 101(C), pages 98-110.
    9. Kumar, Indraneel & Tyner, Wallace E. & Sinha, Kumares C., 2016. "Input–output life cycle environmental assessment of greenhouse gas emissions from utility scale wind energy in the United States," Energy Policy, Elsevier, vol. 89(C), pages 294-301.
    10. Matthies, Brent D. & Kalliokoski, Tuomo & Ekholm, Tommi & Hoen, Hans Fredrik & Valsta, Lauri T., 2015. "Risk, reward, and payments for ecosystem services: A portfolio approach to ecosystem services and forestland investment," Ecosystem Services, Elsevier, vol. 16(C), pages 1-12.
    11. Gabriel, Steven A. & Kumar, Satheesh & Ordonez, Javier & Nasserian, Amirali, 2006. "A multiobjective optimization model for project selection with probabilistic considerations," Socio-Economic Planning Sciences, Elsevier, vol. 40(4), pages 297-313, December.
    12. Knoke, Thomas & Paul, Carola & Härtl, Fabian & Castro, Luz Maria & Calvas, Baltazar & Hildebrandt, Patrick, 2015. "Optimizing agricultural land-use portfolios with scarce data—A non-stochastic model," Ecological Economics, Elsevier, vol. 120(C), pages 250-259.
    13. Martin R. Young, 1998. "A Minimax Portfolio Selection Rule with Linear Programming Solution," Management Science, INFORMS, vol. 44(5), pages 673-683, May.
    14. Rudolf, Markus & Wolter, Hans-Jurgen & Zimmermann, Heinz, 1999. "A linear model for tracking error minimization," Journal of Banking & Finance, Elsevier, vol. 23(1), pages 85-103, January.
    15. Varun, & Prakash, Ravi & Bhat, I.K., 2012. "Life cycle greenhouse gas emissions estimation for small hydropower schemes in India," Energy, Elsevier, vol. 44(1), pages 498-508.
    16. Güray Kara & Ayşe Özmen & Gerhard-Wilhelm Weber, 2019. "Stability advances in robust portfolio optimization under parallelepiped uncertainty," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 27(1), pages 241-261, March.
    17. Henriques, C.O. & Inuiguchi, M. & Luque, M. & Figueira, J.R., 2020. "New conditions for testing necessarily/possibly efficiency of non-degenerate basic solutions based on the tolerance approach," European Journal of Operational Research, Elsevier, vol. 283(1), pages 341-355.
    18. Suh, Sangwon, 2006. "Reply: Downstream cut-offs in integrated hybrid life-cycle assessment," Ecological Economics, Elsevier, vol. 59(1), pages 7-12, August.
    19. Lo Piano, Samuele & Mayumi, Kozo, 2017. "Toward an integrated assessment of the performance of photovoltaic power stations for electricity generation," Applied Energy, Elsevier, vol. 186(P2), pages 167-174.
    20. Inuiguchi, Masahiro & Kume, Yasufumi, 1991. "Goal programming problems with interval coefficients and target intervals," European Journal of Operational Research, Elsevier, vol. 52(3), pages 345-360, June.
    21. Voorspools, Kris R. & Brouwers, Els A. & D'haeseleer, William D., 2000. "Energy content and indirect greenhouse gas emissions embedded in [`]emission-free' power plants: results for the Low Countries," Applied Energy, Elsevier, vol. 67(3), pages 307-330, November.
    22. Oliveira, Carla & Antunes, Carlos Henggeler, 2007. "Multiple objective linear programming models with interval coefficients - an illustrated overview," European Journal of Operational Research, Elsevier, vol. 181(3), pages 1434-1463, September.
    23. Mansini, Renata & Speranza, Maria Grazia, 1999. "Heuristic algorithms for the portfolio selection problem with minimum transaction lots," European Journal of Operational Research, Elsevier, vol. 114(2), pages 219-233, April.
    24. Crawford, R.H., 2009. "Life cycle energy and greenhouse emissions analysis of wind turbines and the effect of size on energy yield," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(9), pages 2653-2660, December.
    25. Ardente, Fulvio & Beccali, Marco & Cellura, Maurizio & Mistretta, Marina, 2011. "Energy and environmental benefits in public buildings as a result of retrofit actions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(1), pages 460-470, January.
    26. J W Chinneck & K Ramadan, 2000. "Linear programming with interval coefficients," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 51(2), pages 209-220, February.
    27. Hiroshi Konno & Hiroaki Yamazaki, 1991. "Mean-Absolute Deviation Portfolio Optimization Model and Its Applications to Tokyo Stock Market," Management Science, INFORMS, vol. 37(5), pages 519-531, May.
    28. Nomura, Noboru & Inaba, Atsushi & Tonooka, Yutaka & Akai, Makoto, 2001. "Life-cycle emission of oxidic gases from power-generation systems," Applied Energy, Elsevier, vol. 68(2), pages 215-227, February.
    29. Carla Oliveira Henriques & Maria Elisabete Duarte Neves, 2019. "A multiobjective interval portfolio framework for supporting investor’s preferences under different risk assumptions," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 70(10), pages 1639-1661, October.
    30. Yvan Dutil & Daniel Rousse, 2012. "Energy Costs of Energy Savings in Buildings: A Review," Sustainability, MDPI, vol. 4(8), pages 1-22, August.
    31. Barbara Glensk & Reinhard Madlener, 2013. "Multi-period portfolio optimization of power generation assets," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 23(4), pages 20-38.
    Full references (including those not matched with items on IDEAS)

    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. Sandra González-Gallardo & Ana B. Ruiz & Mariano Luque, 2021. "Analysis of the Well-Being Levels of Students in Spain and Finland through Interval Multiobjective Linear Programming," Mathematics, MDPI, vol. 9(14), pages 1-27, July.
    2. C. Oliveira Henriques & S. Sousa, 2023. "A Review on Economic Input-Output Analysis in the Environmental Assessment of Electricity Generation," Energies, MDPI, vol. 16(6), pages 1-26, March.
    3. C Papahristodoulou & E Dotzauer, 2004. "Optimal portfolios using linear programming models," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 55(11), pages 1169-1177, November.
    4. Henriques, C.O. & Luque, M. & Marcenaro-Gutierrez, O.D. & Lopez-Agudo, L.A., 2019. "A multiobjective interval programming model to explore the trade-offs among different aspects of job satisfaction under different scenarios," Socio-Economic Planning Sciences, Elsevier, vol. 66(C), pages 35-46.
    5. Liu, Yong-Jun & Zhang, Wei-Guo, 2015. "A multi-period fuzzy portfolio optimization model with minimum transaction lots," European Journal of Operational Research, Elsevier, vol. 242(3), pages 933-941.
    6. Zhou, Feng & Huang, Gordon H. & Chen, Guo-Xian & Guo, Huai-Cheng, 2009. "Enhanced-interval linear programming," European Journal of Operational Research, Elsevier, vol. 199(2), pages 323-333, December.
    7. Wu, Hsien-Chung, 2009. "The Karush-Kuhn-Tucker optimality conditions in multiobjective programming problems with interval-valued objective functions," European Journal of Operational Research, Elsevier, vol. 196(1), pages 49-60, July.
    8. Buckley, Winston S. & Brown, Garfield O. & Marshall, Mario, 2012. "A mispricing model of stocks under asymmetric information," European Journal of Operational Research, Elsevier, vol. 221(3), pages 584-592.
    9. Barbara Glensk & Reinhard Madlener, 2018. "Fuzzy Portfolio Optimization of Power Generation Assets," Energies, MDPI, vol. 11(11), pages 1-22, November.
    10. Philipp Baumann & Norbert Trautmann, 2013. "Portfolio-optimization models for small investors," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 77(3), pages 345-356, June.
    11. Carla Oliveira Henriques & Maria Elisabete Neves & Licínio Castelão & Duc Khuong Nguyen, 2022. "Assessing the performance of exchange traded funds in the energy sector: a hybrid DEA multiobjective linear programming approach," Annals of Operations Research, Springer, vol. 313(1), pages 341-366, June.
    12. Mansini, Renata & Ogryczak, Wlodzimierz & Speranza, M. Grazia, 2014. "Twenty years of linear programming based portfolio optimization," European Journal of Operational Research, Elsevier, vol. 234(2), pages 518-535.
    13. Renata Mansini & Włodzimierz Ogryczak & M. Speranza, 2007. "Conditional value at risk and related linear programming models for portfolio optimization," Annals of Operations Research, Springer, vol. 152(1), pages 227-256, July.
    14. Fang, Yong & Chen, Lihua & Fukushima, Masao, 2008. "A mixed R&D projects and securities portfolio selection model," European Journal of Operational Research, Elsevier, vol. 185(2), pages 700-715, March.
    15. Prieto-Latorre, Claudia & Lopez-Agudo, Luis Alejandro & Luque, Mariano & Marcenaro-Gutierrez, Oscar David, 2022. "The ideal use of the internet and academic success: Finding a balance between competences and knowledge using interval multiobjective programming," Socio-Economic Planning Sciences, Elsevier, vol. 81(C).
    16. Lin, Chang-Chun & Liu, Yi-Ting, 2008. "Genetic algorithms for portfolio selection problems with minimum transaction lots," European Journal of Operational Research, Elsevier, vol. 185(1), pages 393-404, February.
    17. Angelelli, Enrico & Mansini, Renata & Speranza, M. Grazia, 2008. "A comparison of MAD and CVaR models with real features," Journal of Banking & Finance, Elsevier, vol. 32(7), pages 1188-1197, July.
    18. Adam Borovička, 2022. "Stock portfolio selection under unstable uncertainty via fuzzy mean-semivariance model," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 30(2), pages 595-616, June.
    19. Sabastine Mushori & Delson Chikobvu, 2016. "A Stochastic Multi-stage Trading Cost model in optimal portfolio selection," EERI Research Paper Series EERI RP 2016/23, Economics and Econometrics Research Institute (EERI), Brussels.
    20. Francesco Cesarone & Andrea Scozzari & Fabio Tardella, 2015. "Linear vs. quadratic portfolio selection models with hard real-world constraints," Computational Management Science, Springer, vol. 12(3), pages 345-370, July.

    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:spr:operea:v:22:y:2022:i:1:d:10.1007_s12351-020-00566-6. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.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.