A cost-effectiveness assessment method and tool for assessing energy efficiency improvements in buildings

Pekka Tuominen; Francesco Reda; Waled Dawoud; Bahaa Elboshy; Ghada Elshafei; Abdelazim Negm; Pekka Tuominen; Francesco Reda; Waled Dawoud; Bahaa Elboshy; Ghada Elshafei; Abdelazim Negm

doi:10.3934/GF.2019.1.67

Green Finance

2019, Volume 1, Issue 1: 67-81. doi: 10.3934/GF.2019.1.67

Previous Article Next Article

Research article Special Issues

A cost-effectiveness assessment method and tool for assessing energy efficiency improvements in buildings

1.
VTT Technical Research Centre of Finland, P.O. Box 1000, 02044 VTT, Finland
2.
Egypt-Japan University of Science and Technology, P.O. Box 179, New Borg El-Arab City, 21934, Egypt
3.
Zagazig University, Faculty of Engineering, Zagazig, Zagazig 44519, Egypt

Received: 21 December 2018 Accepted: 07 March 2019 Published: 21 March 2019
JEL Codes: Q40

This paper proposes a method and a tool based on cost-effectiveness analysis (CEA) for assessing energy efficiency improvements in buildings using a case example from Egypt. Commonly used methods for economic appraisal of energy efficiency improvements have shortcomings that warrant the study of alternative methods. To offer avenues for improving the current economic assessment of energy efficiency, methods used in other fields are studied. A chain of argumentation for choosing a suitable method is developed. As a result, CEA appears to be best suited to the problem at hand. It can be used to, first, define the cost of the primary aim of saving energy and, second, allow the comparison of alternative investments in sustainable energy, not limited to energy conservation alone. A case building is studied with a calculation using a CEA method adapted for energy efficiency improvements in buildings to demonstrate the use of the method. In the case studied the CEA calculation produced costs of 0.26-0.60 USD/kWh for energy saved by the energy efficiency investments made. A systematic appraisal of cost-effectiveness of alternative energy efficiency projects would allow pointing out the most effective ones in terms of energy saved per money spent.
- energy efficiency,
- cost-effectiveness,
- economic efficiency,
- investment,
- budgeting
Citation: Pekka Tuominen, Francesco Reda, Waled Dawoud, Bahaa Elboshy, Ghada Elshafei, Abdelazim Negm. A cost-effectiveness assessment method and tool for assessing energy efficiency improvements in buildings[J]. Green Finance, 2019, 1(1): 67-81. doi: 10.3934/GF.2019.1.67

Related Papers:

Abstract

This paper proposes a method and a tool based on cost-effectiveness analysis (CEA) for assessing energy efficiency improvements in buildings using a case example from Egypt. Commonly used methods for economic appraisal of energy efficiency improvements have shortcomings that warrant the study of alternative methods. To offer avenues for improving the current economic assessment of energy efficiency, methods used in other fields are studied. A chain of argumentation for choosing a suitable method is developed. As a result, CEA appears to be best suited to the problem at hand. It can be used to, first, define the cost of the primary aim of saving energy and, second, allow the comparison of alternative investments in sustainable energy, not limited to energy conservation alone. A case building is studied with a calculation using a CEA method adapted for energy efficiency improvements in buildings to demonstrate the use of the method. In the case studied the CEA calculation produced costs of 0.26-0.60 USD/kWh for energy saved by the energy efficiency investments made. A systematic appraisal of cost-effectiveness of alternative energy efficiency projects would allow pointing out the most effective ones in terms of energy saved per money spent.

References

[1]	Albiz (2014) Double-glazed windows, Allbiz Egypt, Alexandria. Available from: http://www.eg.all.biz/en/double-glazed-windows-glass-blocks-bgc2300.
[2]	Alliance to save energy (2011) Which light bulb is really cheaper? Alliance to save energy. Available from: https://www.ase.org/resources/lesson-plan-which-light-bulb-really-cheaper-6-9.
[3]	Alibaba (2014a) Fan coil unit. Alibaba Group. Available from: http://www.alibaba.com/product-detail/Fan-coil-unit_1888781785.html.
[4]	Alibaba (2014b) Stainless steel water tank for storage. Alibaba Group. Available from: http://www.alibaba.com/product-detail/stainless-steel-304-water-tank-for_1848905318.html.
[5]	Alibaba (2014c) High efficiency stainless steel water tank for storage. Alibaba Group. Available from: http://www.alibaba.com/product-detail/High-efficiency-stainless-steel-hot-water_1833163696.html.
[6]	Alibaba (2014d) Glazed solar thermal collector. Alibaba Group. Available from: http://www.alibaba.com/product-detail/glazed-solar-thermal-collector-with-heat_407713760.html.
[7]	Alibaba (2015) Unglazed solar collector. Available online (Accessed 2015): Alibaba Group. Available from: http://www.alibaba.com/product-detail/unglazed-solar-collector-china-unglazed-solar_1662133726.html.
[8]	Atanasiu B, et al. (2013) Implementing the Cost-Optimal Methodology in EU Countries–Lessons learned from three case studies. Brussels: Buildings Performance Institute Europe.
[9]	Bloomberg (2015) USD-EGB Exchange Rate. Available from: https://www.bloomberg.com/quote/USDEGP:CUR.
[10]	Bloomberg (2017) Climate Scope 2017. New York: Bloomberg Finance.
[11]	Boussabaine H, Kirkham R (2004) Whole life-cycle costing. Oxford: Blackwell Publishing.
[12]	EIPR (2018) Electricity Facts 2017/2018. Cairo: Egyptian Initiative for Personal Rights. Available from: https://eipr.org/en/publications/electricity-facts-20172018-price-hikes-continue.
[13]	Brealey R, Myers S, Franklin A (2007) Principles of corporate finance. Boston: McGraw-Hill/Irwin.
[14]	Davis A, Wong-Parodi G, Krishnamurti T (2019) Neither a borrower nor a lender be: Beyond cost in energy efficiency decision-making among office buildings in the United States. Energy Res Soc Sci 47: 37–45. doi: 10.1016/j.erss.2018.08.008
[15]	Dhillon B (2009) Life Cycle Costing for Engineers. Boca Raton: CRC Press.
[16]	Egyptian Ministry of Housing (2014) Construction materials prices. Egyptian ministry of housing, utilities and urban communities. Available from: http://www.moh.gov.eg/section3/Building_materials_DET.aspx.
[17]	Elwatan News (2015) LED lamp prices. Available from: http://www.elwatannews.com/news/details/677437.
[18]	European Commission (2010) Directive 2010/31/EU on the energy performance of buildings.
[19]	European Commission (2009) Evaluating socio economic development sourcebook 2: Methods & Techniques. Brussels: European Commission. Available from: http://cati.org.pl/download/MCA/multicriteria_analysis.pdf.
[20]	Eurostat (2018) Electricity price statistics. Available from: https://ec.europa.eu/eurostat/statistics-explained/index.php/Electricity_price_statistics.
[21]	Feldman D, et al. (2012) Photovoltaic (PV) pricing trends: Historical, recent, and near-term projections. Oak Ridge: US, Department of Energy.
[22]	Fiorito (2015) Wood doors, windows and shutters. Available from: http://www.fioritoegypt.com/View_product.aspx?CAT_ID=10.
[23]	GWL Power (2015) Sinopoly lithium cell LiFePO4. Available from: http://www.ev-power.eu/Sinopoly-40Ah-300Ah/SP-LFP200AHA-Lithium-Cell-LiFePO4-3-2V-200Ah.html.
[24]	Haas R (1997) Energy efficiency indicators in the residential sector. Energy Polity 25: 789–802. doi: 10.1016/S0301-4215(97)00069-4
[25]	Karásek J, Pojar J, Kaločai L, et al. (2018) Cost optimum calculation of energy efficiency measures in the Czech Republic. Energy Policy 123: 155–166. doi: 10.1016/j.enpol.2018.08.049
[26]	Kangas HL, Lazarevic D, Kivimaa P (2018) Technical skills, disinterest and non-functional regulation: Barriers to building energy efficiency in Finland viewed by energy service companies. Energy Policy 114: 63–76. doi: 10.1016/j.enpol.2017.11.060
[27]	Keeler E, Cretin S (1982) Discounting of nonmonetary effects. Santa Monica: The Rand Corporation.
[28]	Jaffe A, Newell R, Stavins R (2004) Economics of Energy Efficiency. Encyclopedia of Energy. San Diego: Elsevier.
[29]	Jaffe A, Stavins R (2003) The energy-efficiency gap What does it mean? Energy Policy 22: 804–810. doi: 10.1016/0301-4215(94)90138-4
[30]	Moisan F, Bosseboeuf D (2013) World energy perspective-Energy efficiency policies: What works and what does not. London, World Energy Council.
[31]	NOAA (2011) Environmental economics. National Oceanic and Atmospheric Administration. Available from: http://coast.noaa.gov/archived/coastal/economics/.
[32]	Nykvist B, Nilsson M (2015) Rapidly falling costs of battery packs for electric vehicles. Nature Clim Change 5: 329–332. doi: 10.1038/nclimate2564
[33]	OECD (2007) Handbook for appraisal of environmental projects financed from public funds. Paris: Organization for Economic Co-operation and Development.
[34]	Om Solarlab (2015) MPPT-tracer 40A inverter. Available from: http://solarlab.se/solpanel/tracer-40a-2.html.
[35]	Patiño-Cambeiro F, Armesto J, Patiño-Barbeitoc F, et al. (2016) Perspectives on Near ZEB Renovation Projects for Residential Buildings: The Spanish Case. Energies 9: 628. doi: 10.3390/en9080628
[36]	Patiño-Cambeiro F, Armesto J, Bastos G, et al. (2019) Economic appraisal of energy efficiency renovations in tertiary buildings. Sustainable Cities and Society.
[37]	Reda F, Tuominen P, Hedman A, et al. (2015) Low-energy residential buildings in New Borg El Arab: Simulation and survey based energy assessment. Energy Build 93: 65–82. doi: 10.1016/j.enbuild.2015.02.021
[38]	Roth C, Ing R, Ross D (1978) Letter to the editor. New Engl J Med 2998: 1088.
[39]	Short W, Packey D, Holt T (1995) A manual for the economic evaluation of energy efficiency and renewable energy technologies. Golden: National Renewable Energy Laboratory.
[40]	Tuominen P, Forsström J, Honkatukia J (2013) Economic effects of energy efficiency improvements in the Finnish building stock. Energy Policy 52: 181–189. doi: 10.1016/j.enpol.2012.10.012
[41]	Tuominen P, Reda F, Dawoud W, et al. (2015) Economic appraisal of energy efficiency in buildings using cost-effectiveness assessment. Proc Econ Finance 21: 422–430. doi: 10.1016/S2212-5671(15)00195-1

Reader Comments

Your name:*

Email:*
© 2019 the Author(s), licensee AIMS Press. This is an open access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0)