IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v16y2023i6p2564-d1091576.html
   My bibliography  Save this article

The Role of Energy Performance Agreements in the Sustainable Development of Decentralized Energy Systems: Methodology for Determining the Equilibrium Conditions of the Contract

Author

Listed:
  • Dmitriy Karamov

    (Baikal School of BRICS, Irkutsk National Research Technical University, 664074 Irkutsk, Russia)

  • Pavel Ilyushin

    (Department of Research on the Relationship between Energy and the Economy, Energy Research Institute of the Russian Academy of Sciences, 117186 Moscow, Russia
    Department of Hydropower and Renewable Energy, National Research University “Moscow Power Engineering Institute”, 111250 Moscow, Russia)

  • Ilya Minarchenko

    (Melentiev Energy Systems Institute of Siberian Branch of the Russian Academy of Sciences, 664033 Irkutsk, Russia)

  • Sergey Filippov

    (Department of Research on the Relationship between Energy and the Economy, Energy Research Institute of the Russian Academy of Sciences, 117186 Moscow, Russia)

  • Konstantin Suslov

    (Department of Hydropower and Renewable Energy, National Research University “Moscow Power Engineering Institute”, 111250 Moscow, Russia
    Department of Power Supply and Electrical Engineering, Irkutsk National Research Technical University, 664074 Irkutsk, Russia)

Abstract

Energy performance contracts are a very promising area for attracting private investment in the renewable energy sector. The concept of energy performance contracting is a well-established mechanism aimed at increasing the energy efficiency of a facility and reducing annual maintenance costs. This paper presents a hierarchical model of a decentralized energy system with renewable energy sources and a battery energy storage system under an energy service agreement. This model reflects the interaction between the client and the performance company. The model includes the main parameters characterizing the energy service contract, such as net present value, contract duration and levelized cost of energy. As an example, a real decentralized power system is considered, which currently only uses diesel generation. In the case of building a photovoltaic system, the optimal equipment composition consists of a 100 kW solar station and storage batteries with a capacity of 240 kW·h. The optimal contract term is 5 years, and diesel fuel savings are 69%.

Suggested Citation

  • Dmitriy Karamov & Pavel Ilyushin & Ilya Minarchenko & Sergey Filippov & Konstantin Suslov, 2023. "The Role of Energy Performance Agreements in the Sustainable Development of Decentralized Energy Systems: Methodology for Determining the Equilibrium Conditions of the Contract," Energies, MDPI, vol. 16(6), pages 1-12, March.
    • Handle: RePEc:gam:jeners:v:16:y:2023:i:6:p:2564-:d:1091576
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/16/6/2564/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/16/6/2564/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Steven A. Gabriel & Antonio J. Conejo & J. David Fuller & Benjamin F. Hobbs & Carlos Ruiz, 2013. "Complementarity Modeling in Energy Markets," International Series in Operations Research and Management Science, Springer, edition 127, number 978-1-4419-6123-5, September.
    2. Tantisattayakul, Thanapol & Kanchanapiya, Premrudee, 2017. "Financial measures for promoting residential rooftop photovoltaics under a feed-in tariff framework in Thailand," Energy Policy, Elsevier, vol. 109(C), pages 260-269.
    3. Hulshof, Daan & Jepma, Catrinus & Mulder, Machiel, 2019. "Performance of markets for European renewable energy certificates," Energy Policy, Elsevier, vol. 128(C), pages 697-710.
    4. Garbuzova-Schlifter, Maria & Madlener, Reinhard, 2016. "AHP-based risk analysis of energy performance contracting projects in Russia," Energy Policy, Elsevier, vol. 97(C), pages 559-581.
    5. Afsharzade, Nashmil & Papzan, Abdolhamid & Ashjaee, Mehdi & Delangizan, Sohrab & Van Passel, Steven & Azadi, Hossein, 2016. "Renewable energy development in rural areas of Iran," Renewable and Sustainable Energy Reviews, Elsevier, vol. 65(C), pages 743-755.
    6. Marchenko, O.V., 2008. "Modeling of a green certificate market," Renewable Energy, Elsevier, vol. 33(8), pages 1953-1958.
    7. Ceballos, Adams & Dresdner-Cid, Jorge David & Quiroga-Suazo, Miguel Ángel, 2018. "Does the location of salmon farms contribute to the reduction of poverty in remote coastal areas? An impact assessment using a Chilean case study," Food Policy, Elsevier, vol. 75(C), pages 68-79.
    8. Sorrell, Steve, 2007. "The economics of energy service contracts," Energy Policy, Elsevier, vol. 35(1), pages 507-521, January.
    9. Hustveit, Magne & Frogner, Jens Sveen & Fleten, Stein-Erik, 2017. "Tradable green certificates for renewable support: The role of expectations and uncertainty," Energy, Elsevier, vol. 141(C), pages 1717-1727.
    10. Nolden, Colin & Sorrell, Steve & Polzin, Friedemann, 2016. "Catalysing the energy service market: The role of intermediaries," Energy Policy, Elsevier, vol. 98(C), pages 420-430.
    11. Aune, Finn Roar & Dalen, Hanne Marit & Hagem, Cathrine, 2012. "Implementing the EU renewable target through green certificate markets," Energy Economics, Elsevier, vol. 34(4), pages 992-1000.
    12. Mellor, John W. & Malik, Sohail J., 2017. "The Impact of Growth in Small Commercial Farm Productivity on Rural Poverty Reduction," World Development, Elsevier, vol. 91(C), pages 1-10.
    13. Deng, Qianli & Jiang, Xianglin & Cui, Qingbin & Zhang, Limao, 2015. "Strategic design of cost savings guarantee in energy performance contracting under uncertainty," Applied Energy, Elsevier, vol. 139(C), pages 68-80.
    14. Ilia Shushpanov & Konstantin Suslov & Pavel Ilyushin & Denis N. Sidorov, 2021. "Towards the Flexible Distribution Networks Design Using the Reliability Performance Metric," Energies, MDPI, vol. 14(19), pages 1-24, September.
    15. Wang, Zhenfeng & Xu, Guangyin & Lin, Ruojue & Wang, Heng & Ren, Jingzheng, 2019. "Energy performance contracting, risk factors, and policy implications: Identification and analysis of risks based on the best-worst network method," Energy, Elsevier, vol. 170(C), pages 1-13.
    16. Helgesen, Per Ivar & Tomasgard, Asgeir, 2018. "An equilibrium market power model for power markets and tradable green certificates, including Kirchhoff's Laws and Nash-Cournot competition," Energy Economics, Elsevier, vol. 70(C), pages 270-288.
    17. Zhang, Sufang & Andrews-Speed, Philip & Li, Sitao, 2018. "To what extent will China's ongoing electricity market reforms assist the integration of renewable energy?," Energy Policy, Elsevier, vol. 114(C), pages 165-172.
    18. Andrey Rylov & Pavel Ilyushin & Aleksandr Kulikov & Konstantin Suslov, 2021. "Testing Photovoltaic Power Plants for Participation in General Primary Frequency Control under Various Topology and Operating Conditions," Energies, MDPI, vol. 14(16), pages 1-20, August.
    19. Linnerud, Kristin & Simonsen, Morten, 2017. "Swedish-Norwegian tradable green certificates: Scheme design flaws and perceived investment barriers," Energy Policy, Elsevier, vol. 106(C), pages 560-578.
    20. Bertoldi, Paolo & Boza-Kiss, Benigna, 2017. "Analysis of barriers and drivers for the development of the ESCO markets in Europe," Energy Policy, Elsevier, vol. 107(C), pages 345-355.
    21. Goldman, Charles A. & Hopper, Nicole C. & Osborn, Julie G., 2005. "Review of US ESCO industry market trends: an empirical analysis of project data," Energy Policy, Elsevier, vol. 33(3), pages 387-405, February.
    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. Dmitriy N. Karamov & Pavel V. Ilyushin & Konstantin V. Suslov, 2022. "Electrification of Rural Remote Areas Using Renewable Energy Sources: Literature Review," Energies, MDPI, vol. 15(16), pages 1-13, August.
    2. Töppel, Jannick & Tränkler, Timm, 2019. "Modeling energy efficiency insurances and energy performance contracts for a quantitative comparison of risk mitigation potential," Energy Economics, Elsevier, vol. 80(C), pages 842-859.
    3. Klinke, Sandra, 2018. "The determinants for adoption of energy supply contracting: Empirical evidence from the Swiss market," Energy Policy, Elsevier, vol. 118(C), pages 221-231.
    4. Xin-gang, Zhao & Ling-zhi, Ren & Yu-zhuo, Zhang & Guan, Wan, 2018. "Evolutionary game analysis on the behavior strategies of power producers in renewable portfolio standard," Energy, Elsevier, vol. 162(C), pages 505-516.
    5. Qin, Quande & Liang, Fuqi & Li, Li & Wei, Yi-Ming, 2017. "Selection of energy performance contracting business models: A behavioral decision-making approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 72(C), pages 422-433.
    6. Yanming Sun & Lin Zhang, 2019. "Full Separation or Full Integration? An Investigation of the Optimal Renewables Policy Employing Tradable Green Certificate Systems in Two Countries’ Electricity Markets," IJERPH, MDPI, vol. 16(24), pages 1-17, December.
    7. Brown, Donal & Hall, Stephen & Martiskainen, Mari & Davis, Mark E., 2022. "Conceptualising domestic energy service business models: A typology and policy recommendations," Energy Policy, Elsevier, vol. 161(C).
    8. Zeng, Lijun & Wang, Jiafeng & Zhao, Laijun, 2022. "An inter-provincial tradable green certificate futures trading model under renewable portfolio standard policy," Energy, Elsevier, vol. 257(C).
    9. Fatras, Nicolas & Ma, Zheng & Duan, Hongbo & Jørgensen, Bo Nørregaard, 2022. "A systematic review of electricity market liberalisation and its alignment with industrial consumer participation: A comparison between the Nordics and China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 167(C).
    10. Shang, Tiancheng & Liu, Peihong & Guo, Junxiong, 2020. "How to allocate energy-saving benefit for guaranteed savings EPC projects? A case of China," Energy, Elsevier, vol. 191(C).
    11. Ying, Zhou & Xin-gang, Zhao & Zhen, Wang, 2020. "Demand side incentive under renewable portfolio standards: A system dynamics analysis," Energy Policy, Elsevier, vol. 144(C).
    12. Ouyang, Jianjun & Ju, Peng, 2017. "The choice of energy saving modes for an energy-intensive manufacturer under non-coordination and coordination scenarios," Energy, Elsevier, vol. 126(C), pages 733-745.
    13. Coulon, Michael & Khazaei, Javad & Powell, Warren B., 2015. "SMART-SREC: A stochastic model of the New Jersey solar renewable energy certificate market," Journal of Environmental Economics and Management, Elsevier, vol. 73(C), pages 13-31.
    14. Hustveit, Magne & Frogner, Jens Sveen & Fleten, Stein-Erik, 2017. "Tradable green certificates for renewable support: The role of expectations and uncertainty," Energy, Elsevier, vol. 141(C), pages 1717-1727.
    15. Shengmin Tan & Xu Wang & Chuanwen Jiang, 2019. "Privacy-Preserving Energy Scheduling for ESCOs Based on Energy Blockchain Network," Energies, MDPI, vol. 12(8), pages 1-16, April.
    16. Teng, Minmin & Lv, Kunfeng & Han, Chuanfeng & Liu, Pihui, 2023. "Trading behavior strategy of power plants and the grid under renewable portfolio standards in China: A tripartite evolutionary game analysis," Energy, Elsevier, vol. 284(C).
    17. Shang, Tiancheng & Yang, Lan & Liu, Peihong & Shang, Kaiti & Zhang, Yan, 2020. "Financing mode of energy performance contracting projects with carbon emissions reduction potential and carbon emissions ratings," Energy Policy, Elsevier, vol. 144(C).
    18. Li, Yan & Qiu, Yueming & Wang, Yi David, 2014. "Explaining the contract terms of energy performance contracting in China: The importance of effective financing," Energy Economics, Elsevier, vol. 45(C), pages 401-411.
    19. Kindström, Daniel & Ottosson, Mikael, 2016. "Local and regional energy companies offering energy services: Key activities and implications for the business model," Applied Energy, Elsevier, vol. 171(C), pages 491-500.
    20. Nguyen, Hieu T. & Felder, Frank A., 2020. "Generation expansion planning with renewable energy credit markets: A bilevel programming approach," Applied Energy, Elsevier, vol. 276(C).

    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:6:p:2564-:d:1091576. 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.