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Economic analysis of upgrading aging residential buildings in China based on dynamic energy consumption and energy price in a market economy

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  • Ouyang, Jinlong
  • Lu, Meijun
  • Li, Bing
  • Wang, Chunyuan
  • Hokao, Kazunori

Abstract

This article employed a standard LCC to conduct economic analysis of upgrading the aging residential buildings in China. According to the current situation, an interest rate of 6%, an inflation rate of 3%, an increase rate of annual energy savings of 2% and an increase rate of electricity price of 2% were assumed in the method. The results indicated that only relying on gradually increasing electricity price and governments' subsidies was not enough. After detailed analysis of the energy saving measures and the distribution of all benefits from building energy retrofit, it was found that actually only 1/3 of original cost was spent only for energy savings, the second 1/3 for both energy savings and good façade appearance and occupants should share the last 1/3 because even if without energy retrofit, they would have to pay the part too. The corresponding results proved that the first 1/3 of investment cost could be drawn back within the residue life cycle, and so the investment could be accepted in a sheer market economy. In the end, a model about distribution of investment cost of and benefits was proposed to adapt the market economy to overcome the financial problems in China.

Suggested Citation

  • Ouyang, Jinlong & Lu, Meijun & Li, Bing & Wang, Chunyuan & Hokao, Kazunori, 2011. "Economic analysis of upgrading aging residential buildings in China based on dynamic energy consumption and energy price in a market economy," Energy Policy, Elsevier, vol. 39(9), pages 4902-4910, September.
    • Handle: RePEc:eee:enepol:v:39:y:2011:i:9:p:4902-4910
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    References listed on IDEAS

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    1. Ouyang, Jinlong & Ge, Jian & Hokao, Kazunori, 2009. "Economic analysis of energy-saving renovation measures for urban existing residential buildings in China based on thermal simulation and site investigation," Energy Policy, Elsevier, vol. 37(1), pages 140-149, January.
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    6. Amstalden, Roger W. & Kost, Michael & Nathani, Carsten & Imboden, Dieter M., 2007. "Economic potential of energy-efficient retrofitting in the Swiss residential building sector: The effects of policy instruments and energy price expectations," Energy Policy, Elsevier, vol. 35(3), pages 1819-1829, March.
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    Cited by:

    1. Xin Liang & Geoffrey Qiping Shen & Li Guo, 2015. "Improving Management of Green Retrofits from a Stakeholder Perspective: A Case Study in China," IJERPH, MDPI, vol. 12(11), pages 1-20, October.
    2. Copiello, Sergio, 2015. "Achieving affordable housing through energy efficiency strategy," Energy Policy, Elsevier, vol. 85(C), pages 288-298.
    3. Liang, Xin & Yu, Tao & Hong, Jingke & Shen, Geoffrey Qiping, 2019. "Making incentive policies more effective: An agent-based model for energy-efficiency retrofit in China," Energy Policy, Elsevier, vol. 126(C), pages 177-189.
    4. Copiello, Sergio, 2017. "Building energy efficiency: A research branch made of paradoxes," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 1064-1076.
    5. 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.
    6. Wang, Xiaotong & Lu, Meijun & Mao, Wei & Ouyang, Jinlong & Zhou, Bo & Yang, Yunkai, 2015. "Improving benefit-cost analysis to overcome financing difficulties in promoting energy-efficient renovation of existing residential buildings in China," Applied Energy, Elsevier, vol. 141(C), pages 119-130.

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