Analysis Of Cooperation Mechanism In Energy Performance Contract

Energy is the arteries in economic and society development. As one of the most effective means, energy conservation accelerates economic and society a sustained and reasonably development. At present, the energy problem (energy shortage and energy waste) has created a bottleneck in economic growth of China. However, Energy Performance Contracting (EPC), a new market-based energy saving mechanism, is a perfect way to solve this problem.In the case of one customer and one energy service company (ESCO), we consider an EPC with an ESCO and a customer where a contract is signed, energy conservation is realized, and energy saving gains are shared. The ESCO chooses the delivery quantity of energy saving and the input cost, and the customer sets the cost and revenue shares. Introducing the consignment contract with revenue sharing in supply chain, we consider the problem of coordination and cooperation between ESCO and customer, In this paper we show that, under the Stackelberg model without cooperation, the overall channel profit loss, compared with that of a centralized system. Utilizing Nash bargaining model, a cooperative mechanism is developed to implement profit sharing between the ESCO and the customer. When the ESCO and the customer are assumed to be risk-neutral, the decentralized system can be perfectly coordinated and both the ESCO and the customer can earn more in cooperation. At last, we also analyze how some parameters impact the optimal decisions and the overall channel profit.In the case of one customer and many ESCOs, we study the ESCO selection based on multi-attribute reverse auction model. The ESCO’s strategy depends on three attributes, including the energy saving quantities supplied, the project leading time, and the sharing proportion of the energy saving benefit. The paper uses a government as the energy service demander, and employs the non-cooperative game among one government and multiple ESCOs to educe the best strategy of all ESCOs. Subsequently, the paper provides a feasible mechanism to select the best ESCO which is able to avoid the bargaining procedure in determining the benefit share, and constrain the vicious competition among the ESCOs. As a result, the actualizing efficiency of the EPC project is improved.By studying win-win issue in the process of EPC, we prompt the cooperation between customer and ESCO, which contributes to further development of the EPC. However, our proposed game model is built on the basis of some assumptions, which may be different from the reality in some degree. To better reflect the reality of EPC, further improvements are needed in future research.