Improving benefit-cost analysis to overcome financing difficulties in promoting energy-efficient renovation of existing residential buildings in China

Improving benefit-cost analysis to overcome financing difficulties in promoting energy-efficient renovation of existing residential buildings in China

Applied Energy 141 (2015) 119–130 Contents lists available at ScienceDirect Applied Energy journal homepage: www.elsevier.com/locate/apenergy Impro...

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Applied Energy 141 (2015) 119–130

Contents lists available at ScienceDirect

Applied Energy journal homepage: www.elsevier.com/locate/apenergy

Improving benefit-cost analysis to overcome financing difficulties in promoting energy-efficient renovation of existing residential buildings in China Xiaotong Wang a,b, Meijun Lu c, Wei Mao a,d, Jinlong Ouyang a,⇑, Bo Zhou a, Yunkai Yang d a

College of Architecture and Environment, Sichuan University, Chengdu 610065, China School of Literature and Art, Southwest University of Science and Technology, Mianyang 621010, China Department of Architecture, North China Institute of Water Conservancy and Hydroelectric, Zhengzhou 450008, China d China CMCU Engineering Corporation (CMCU), Chongqing 400039, China b c

h i g h l i g h t s  Financing difficulties hinder energy retrofit of aging residential buildings in China.  New indices based on benefit-cost analysis are presented to overcome barriers.  New indices can be applied to rank energy measures and propose optimum plans.  Improved benefit-cost analysis will attract the government and residents to co-invest.  A ‘‘win–win’’ model means the governments and residents can co-invest and co-benefit.

a r t i c l e

i n f o

Article history: Received 21 January 2014 Received in revised form 29 November 2014 Accepted 1 December 2014

Keywords: Financing Benefit-cost analysis Cost-effectiveness Win–win

a b s t r a c t Energy-efficient renovation of existing residential buildings is an important energy policy in China, but financing difficulties seriously hinder the promotion of the policy. In this article, novel indices based on benefit-cost analysis are presented to overcome the barriers. Firstly, benefit-cost analysis is expanded to include the ratio of energy-saving benefit to investment cost (EnIR), the ratio of environmental benefit to investment cost (EvIR), and the ratio of economic benefit to investment cost (EcIR). The above ratios are applied to determine the optimum plans with the highest cost-effectiveness for the buildings to be renovated. Secondly, according to the actual situation regarding both the government and residents, EnIR is modified to the ratio of energy-saving benefit from the retrofit plan to the part of the investment cost undertaken by the government (EnIgR), EvIR to the ratio of environmental benefit from the retrofit plan to the part of the investment cost undertaken by the government (EvIgR), and EcIR to the ratio of economic benefit from the retrofit plan to the part of the investment cost undertaken by residents (EcIrR). The modified ratios can increase awareness of residents in respect of their individual benefits from the adoption of the optimum plans, and can attract them to co-invest. Through these two steps, financing difficulties could be eased or even no longer considered as obstacles to some extent. The ratios are applied to a case study building in Hangzhou. Based on the results, a ‘‘win–win’’ model, consistent with market principles, is developed, in which both the government and residents can co-invest and co-benefit. The model has proven to be an effective decision-making tool in promoting the building renovation policy in China. Ó 2014 Elsevier Ltd. All rights reserved.

Abbreviations: EnIR, ratio of energy-saving benefit to investment cost; EnIgR, ratio of energy-saving benefit to the part of the investment cost undertaken by the government; EvIR, ratio of environmental benefit to investment cost; EvIgR, ratio of environmental benefit to the part of the investment cost undertaken by the government; EcIR, ratio of economic benefit to investment cost; EcIrR, ratio of economic benefit to the part of the investment cost undertaken by residents; En, energy saving in building operation stage; EnI, initial energy input in stages of material production, transportation, on-site construction and final demolition; Ev, CO2 emission mitigation due to energy saving in building operation stage; EvI, initial CO2 emission in stages of material production, transportation, on-site construction and final demolition; Ec, economic return due to energy saving in building operation stage; EcI, investment cost; EcIg, the part of the investment cost undertaken by the government; EcIr, the part of the investment cost undertaken by residents; U-value, overall heat transfer coefficient, W/(m2 K); D, thermal inertia index; q, solar radiation absorption of exterior surface of building opaque envelope; SC, shade coefficient of exterior windows; EMC, energy management contract; ESM, energy-saving measure; LCA, life cycle assessment; AC, air-conditioning; XPS, extruded polystyrene; COP, coefficient of performance. ⇑ Corresponding author: Tel./fax: +86 2885401015. E-mail address: [email protected] (J. Ouyang). http://dx.doi.org/10.1016/j.apenergy.2014.12.001 0306-2619/Ó 2014 Elsevier Ltd. All rights reserved.

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Nomenclature EnIRi Eni EnIi

EcIi EvIRi Evi

EvIi

EcIRi Eci

EnIgRj

Enj EnIj

the ratio of the energy-saving benefit to the investment cost of the ith ESM, defined in Eq. (1) the energy saving in building operation stage for the adoption of the ith ESM, defined in Eq. (1) the ith ESM’s initial energy input in the stages of material production, transportation, on-site construction and final demolition, defined in Eq. (1) the ith ESM’s investment cost, defined in Eqs. (1)–(3) the ratio of the environmental benefit to the investment cost of the ith ESM, defined in Eq. (2) the CO2 emission mitigation due to the energy saving in building operation stage for the adoption of ith ESM, defined in Eq. (2) the ith ESM’s initial CO2 emission in the stages of material production, transportation, on-site construction and final demolition, defined in Eq. (2) the ratio of the economic benefit to the investment cost of the ith ESM, defined in Eq. (3) the economic return due to the energy saving in building operation stage for the adoption of the ith ESM, defined in Eq. (3) the ratio of the energy-saving benefit from the jth retrofit plan to the part of the investment cost undertaken by the government, defined in Eq. (4) the energy saving in the operation stage for the adoption of the jth retrofit plan, defined in Eq. (4) the jth retrofit plan’s initial energy input in the stages of material production, transportation, on-site construction and final demolition, defined in Eq. (4)

1. Background 90% of urban residential buildings in China have poor energy performance [1]. For example, because of the poor thermal insulation performance of the building envelope, the high energy loss in the heating systems, a lack of metering and control methods, and so on, the average heating energy consumption in northern China is 100–200% times more than that in developed countries at the same latitude [2]. In less climatically amiable cities, even more energy is used to maintain a higher functional quality for such buildings [3], thus the residential sector has become a major energy consumer and a significant contributor to climate change. Renovation of residential buildings is a sustainable way to improve the built environment, by which unnecessary waste of construction resources can be considerably reduced [4]. Therefore, upgrading buildings through energy-efficient renovation has become an important energy policy in China. It offers significant opportunities for energy saving and CO2 emission mitigation [5,6]. Approximately 0.19 billion m2 aging residential buildings in the northern heating areas have been refurbished in ‘‘the 11th Five-Year Plan’’ period (from 2006 to 2010) [7]. At least 0.4 billion m2 in the northern heating areas and 50 million m2 in the hot summer and cold winter region are about to be renovated in ‘‘the 12th Five-Year Plan’’ period (from 2011 to 2015) [8]. Undoubtedly, more and more buildings need to be upgraded in the foreseeable future. There are two problems for aging residential building retrofitting in China. Firstly, existing residential buildings can only be refurbished under the leadership of the government. In the real estate market, investors are always reluctant to pay extra cost for energy efficiency. Investors are obligated to abide energy efficiency codes when new buildings are constructed. Nevertheless, investors

EcIgj EvIgRj

Evj

EvIj

EcIrRj

Ecj

EcIrj Ri

E0 Si ES E0 Fi EF

the part of the jth retrofit plan’s investment cost undertaken by the government, defined in Eq. (4) and (5) the ratio of the environmental benefit from the jth retrofit plan to the part of the investment cost undertaken by the government, defined in Eq. (5) the CO2 emission reduction due to the energy saving in the operation stage for the adoption of the jth retrofit plan, defined in Eq. (5) the jth retrofit plan’s initial CO2 emission in the stages of material production, transportation, on-site construction and final demolition, defined in Eq. (5) the ratio of economic benefit from the jth retrofit plan to the part of the investment cost undertaken by residents, defined in Eq. (6) the economic return due to the energy saving in the operation stage for the adoption of the jth retrofit plan, defined in Eq. (6) the part of the jth retrofit plan’s investment cost undertaken by residents, defined in Eq. (6) the relative value of energy-saving effect of the ith ESM on reducing the heating load or cooling load, defined in Eq. (7) the heating load or cooling load after a retrofit according to the ith ESM in simulation, defined in Eq. (7) the heating load or cooling load in simulation, defined in Eq. (7) the possibly factual heating load or cooling load after a retrofit due to the ith ESM, defined in Eq. (7) the factual heating load or cooling load, defined in Eq. (7)

are no longer responsible for retrofitting old buildings that have been sold for decades. Secondly, though the energy management contract (EMC) mode is popular and widely employed in the field of energy-efficient renovation, it is not applicable in China. The economic balance between saved energy and repayment of the investment is energy price-dependent [9–11]. In the household sector of China, energy price is so low that extra cost for energy efficiency cannot be retrieved, so such investments are financially unattractive [12,13]. Therefore, house owners have their own varying opinions on the upgrading of their apartment buildings. In order to mobilize local governments to organize actively and to ensure sufficient capital is available for aging residential buildings retrofitting, the Ministry of Finance of China has appropriated a special fund from the central financial budget, subsidizing 55 RMBU/m2, 45 RMBU/m2, 25 RMBU/m2, 20 RMBU/m2 and 15 RMBU/m2 respectively to the severe cold region, the cold region, the hot summer and cold winter region’s western part, middle part and eastern part [14,15]. However, the cost fluctuates generally from 150 RMBU/m2 to 400 RMBU/m2 for a retrofitted project [7]. There is a big gap between the retrofit cost and the subsidy. Only a few demonstration projects have been undertaken with the help of the sponsors [16,17]. According to the distribution of benefits from aging residential building retrofitting projects (shown as Fig. 1) [18], the government and residents could be the potential investors. Nevertheless, being both the executors and the decision-makers, some local governments perhaps do not want to appropriate some other funds from the local financial budget to cover the rest of the retrofit cost. They often regard upgrading aging residential buildings only as a political task assigned by the central government of China and do not recognize the importance for the country and society in

X. Wang et al. / Applied Energy 141 (2015) 119–130

Fig. 1. Distribution of benefits from upgrading aging residential buildings in China.

any depth. Likewise, a number of house owners would like to undertake only 10% of the retrofit cost [12], although all economic benefit from refurbishing their buildings belongs to them. Additionally, retrofitting will inevitably result in some inconvenience and loss, for instance disturbing normal domestic life, changing the original indoor finishes, and so on. So residents are often reluctant to participate, not to mention sharing the retrofit costs in the beginning [19]. Thereby, it can be concluded that financing difficulties seriously hinder the energy-efficient renovation of aging residential buildings in China. It also occurs in other countries, such as Denmark, Korea and the Nordic countries [10,20,21]. Researchers also have identified the barriers when they analyzed the problems encountered in the implementation process in ‘‘the 11th Five-Year Plan’’ [7,22]. After analyzing the experience from both domestic and international projects in upgrading existing residential buildings, Lv et al. pointed out that the current technology for energy-saving retrofitting has gradually matured, and the real difficulties are concentrated in determining the scientific and rational financing patterns [15]. In order to overcome the barriers to ensure sufficient financial support, many experts have emphasized the importance of political support and measures, such as financial incentive mechanism, energy saving reward mechanism, payback mechanism, multichannel financing model, and mandatory charging standard [7,20]. Appropriate political measures are of great value for driving the initiations in the beginning, but too many executive policy interventions are not thought as effective long-term or smooth approaches. Marketing strategies are considered much better [21]. In the market economy, investors usually demand benefits that can justify their cost, and as a result calls for using benefit-cost analysis have increased [23,24]. As long as investments in the renovation of residential buildings are proven profitable, sufficient funds would be ‘‘absorbed’’, rather than be ‘‘pushed’’, into such campaigns automatically, but the cheap energy price is the market hindrance in China [12,13]. Consequently, under financial pressure, local governments have to ask residents and themselves to share the non-subsidized retrofit cost in many residential building retrofitting projects. However, there is no related research on whether this financing model is reasonable, from the perspective of the market economy, in the special context of China. Energy-efficient renovation of aging residential buildings fulfills many desirable outcomes in the aspects of energy saving, CO2 emission mitigation, livelihood issues, economic stability and social harmony. Common benefit-cost analysis cannot match the expectations in assessing the multiple impacts, except by multibenefit-cost analysis. Chau et al. have developed an environmental impact-cost ratio, so that the environmental impact of the assessment criteria can be assessed in monetary terms [25]. The idea widens the usage scope of benefit-cost analysis. In this article, novel indices are proposed to improve benefit-cost analysis so that decision-makers can solve financing difficulties, and a fully new financing model consistent with market principles is also developed to promote the energy-efficient renovation of existing residential buildings in China.

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The structure of the article is presented as follows. Firstly, in Section 2, according to the important benefits from refurbishment, benefit-cost analysis is expanded to include the ratio of energy-saving benefit to investment cost (EnIR), the ratio of environmental benefit to investment cost (EvIR), and the ratio of economic benefit to investment cost (EcIR), and is explained in detail. Local governments, as decision-makers, can apply the indices to quantify the energy-saving and environmental impacts of energy-saving measures (ESMs) or plans, as well as the economic impacts in monetary terms. Thereby, they can determine optimum plans with the highest cost-effectiveness for the buildings to be renovated. As a result, lower funding can result in more energy saving and CO2 emission reduction. In Section 3, EnIR is modified to the ratio of energy-saving benefit from the retrofit plan to the part of the investment cost undertaken by the government (EnIgR), EvIR to the ratio of environmental benefit from the retrofit plan to the part of the investment cost undertaken by the government (EvIgR), and EcIR to the ratio of economic benefit from the retrofit plan to the part of the investment cost undertaken by residents (EcIrR). The retrofit cost is divided into two aspects, undertaken by the government and by residents. The government focuses on energy and environmental efficiency, whereas residents concentrate more on direct economic benefit and the improvement of the functional quality of their buildings. Correspondently, the ratios of EnIR, EvIR and EcIR are further modified to EnIgR, EvIgR and EcIrR respectively. Researchers have observed the actual situations as well, but there are no corresponding modifications in their evaluation methods [22,26]. In Section 4, a case study is employed to show the usages of the ratios in aging residential building retrofitting projects. In Section 5, based on the results of the case study, a win–win model is proposed and its functions are analyzed. Finally, the conclusions are summarized in Section 6. 2. Introduction of EnIR, EvIR and EcIR Generally, an energy-efficient retrofit plan comprises several ESMs in a subject building. However, only a few are adopted due to budget constraints. As ESMs’ benefits and investment costs vary, without an appropriate hierarchy it is difficult to know which should be integrated into the final plan. For example, even among the three main parts of building envelope, i.e. windows, walls and roof, which part should first recover insulation materials or be replaced by better insulation materials? Since energy saving and CO2 emission mitigation are the main impetuses for governments to implement energy-efficient renovation of residential buildings, some crucial indices should be presented to achieve a maximum amount of energy saving and CO2 emission mitigation with a minimum budget. Based on the concept of life cycle assessment (LCA), the ratios of EnIR, EvIR and EcIR are proposed to rank available ESMs for determining the order of adoption, expressed as Eqs. (1)–(3) respectively.

EnIRi ¼ ðEni  EnIi Þ=EcIi

ð1Þ

Ev IRi ¼ ðEv i  Ev Ii Þ=EcIi EcIRi ¼ ðEci  EcIi Þ=EcIi

ð2Þ ð3Þ

EnIRi: the ratio of the energy-saving benefit to the investment cost of the ith ESM. EvIRi: the ratio of the environmental benefit to the investment cost of the ith ESM. EcIRi: the ratio of the economic benefit to the investment cost of the ith ESM. Eni: the energy saving in building operation stage for the adoption of the ith ESM.

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Evi: the CO2 emission mitigation due to the energy saving in building operation stage for the adoption of ith ESM. Eci: the economic return due to the energy saving in building operation stage for the adoption of the ith ESM. EnIi: the ith ESM’s initial energy input in the stages of material production, transportation, on-site construction and final demolition. EvIi: the ith ESM’s initial CO2 emission in the stages of material production, transportation, on-site construction and final demolition. EcIi: the ith ESM’s investment cost. As the most important indices, these ratios can assess various ESMs more comprehensively. The higher ratios any ESM has, the more benefits it can gain with the same cost, so in terms of EnIR, EvIR and EcIR, the hierarchy of available ESMs can be determined and the ones ranked top are the best choices. In practice, there are many suitable alternatives for each ESM, for instance, windows with different insulation performance, frames with different materials. The assembling of these components results in different alternatives, however, the ratios can also distinguish the best one by ranking the alternatives. Moreover, the ratios can optimize the ESMs that have optimum choices at given conditions, such as the thermal insulation thickness of the building opaque envelope. Thicker insulation materials of the walls and roof have bigger effects on energy saving and CO2 emission reduction, but with more initial cost. Above a certain thickness of insulation, the potential benefits cannot justify the extra cost [27]. The ratios proposed can be used to find the critical value. All in all, with the assistance of EnIR, EvIR and EcIR, local governments can put forward an optimum plan for the building to be renovated within a constrained budget. Limited funds can save more energy and gain more environmental benefit. Certainly, the ratios can be employed to compare different plans.

3. Introduction of EnIgR, EvIgR and EcIrR However, in the assessment of the final plans, it is better to modify the ratios to EnIgR, EvIgR and EcIrR respectively, for the actual situations of the government and residents in upgrading aging residential buildings in China. Generally, energy-efficient renovation can improve the functional quality of aging residential buildings and bring considerable economic benefits from energy saving in the long-term. Although underwriting most of the retrofit cost, the government cannot share any economic benefit. For them, energy saving and CO2 emission mitigation are the most important benefits. Hence, EnIR and EvIR are modified respectively to EnIgR and EvIgR from the standpoint of the government (see Eqs. (4) and (5)).

EnIgRj ¼ ðEnj  EnIj Þ=EcIg j

ð4Þ

Ev IgRj ¼ ðEv j  Ev Ij Þ=EcIg j

ð5Þ

EnIgRj: the ratio of the energy-saving benefit from the jth retrofit plan to the part of investment cost undertaken by the government. EvIgRj: the ratio of the environmental benefit from the jth retrofit plan to the part of investment cost undertaken by the government. Enj: the energy saving in the operation stage for the adoption of the jth retrofit plan. Evj: the CO2 emission reduction due to the energy saving in operation stage for the adoption of the jth retrofit plan.

EnIj: the jth retrofit plan’s initial energy input in the stages of material production, transportation, on-site construction and final demolition. EvIj: the jth retrofit plan’s initial CO2 emission in the stages of material production, transportation, on-site construction and final demolition. EcIgj: the part of the jth retrofit plan’s investment cost undertaken by the government. In the northern heating areas of China, the indoor temperature in aging residential buildings often fails to 16 °C in winter before refurbishment, even with the heating supplied by district heating systems. With the improvement of the thermal performance of the building envelopes after retrofitting, the indoor temperature can easily reach 18 °C. To improve the functional quality of their buildings is the main driving force for residents to spontaneously invest in a retrofit [19]. However, in regions without district heating systems in winter, residents often use split-type air-conditionings (ACs) or heating equipments to warm their houses, whether before or after a retrofit. Less energy might be consumed after a retrofit, but they cannot experience a significant change in the indoor thermal improvement brought by the retrofit. Hence, residents in the regions might be more reluctant to share any part of the retrofit cost. It will take a longer time and more effort by the government to persuade them. If residents are aware of gaining considerable economic benefit from a retrofit, they might change their attitude. In the end, the financial burden of local governments will be alleviated and the retrofit process will be accelerated. Therefore, EcIR is modified to EcIrR from the standpoint of residents (see Eq. (6)).

EcIrRj ¼ ðEcj  EcIrj Þ=EcIrj

ð6Þ

EcIrRj: the ratio of economic benefit from the jth retrofit plan to the part of investment cost undertaken by residents. Ecj: the economic return due to the energy saving in the operation stage for the adoption of the jth retrofit plan. EcIrj: the part of the jth retrofit plan’s investment cost undertaken by residents. EcI: is composed of EcIg and EcIr, so the modified ratios of EnIgR, EvIgR and EcIrR should be higher than EnIR, EvIR and EcIR respectively. Thus, whether for the government or residents, their benefits will be magnified to some degree. The increased benefits will further entice them to participate, to cooperate and most importantly to invest. 4. Case study 4.1. Description of the case building and ESMs In order to show the usage of the ratios, a five-storey residential building, located in Hangzhou, the eastern part of the hot summer and cold winter region in China [28], is selected as a case study building. Hangzhou’s climate is humid subtropical with four distinct seasons, characterized by long, very hot, humid summers and chilly, cloudy, and dry winters with occasional snow. The detailed weather data are summarized in Table 1 [29]. The standard plan from the first to the fifth floor of the building is shown in Fig. 2. Each storey has 4 households and 354 m2 livable floor area in total. It was constructed in 1992 without insulation. The thermal parameters are summarized in Table 2. The Ministry of Finance of China has prescribed the retrofit content of existing residential buildings in the hot summer and cold winter region as follows: installing external shading systems, replacing poorinsulation windows, improving insulation performance of exterior walls and roof [15]. Five ESMs (shown in Table 3) are proposed to upgrade the building.

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X. Wang et al. / Applied Energy 141 (2015) 119–130 Table 1 Summary statistics of Hangzhou weather data. Parameter

Month

January

February

March

April

May

June

July

August

September

October

November

December.

All-year

Temperature (°C)

Mean Highest Lowest Standard deviation

5.2 15.7 1.8 3.7

6.6 21.9 1.4 4.3

10.8 29.7 0.2 5.5

16.3 31.9 8.0 4.2

21.2 32.2 11.4 3.4

24.9 36.8 17.6 4.5

27.6 36.0 20.4 3.9

28.2 36.0 24.0 2.7

24.1 30.4 18.2 2.5

19.2 31.6 9.7 3.6

12.7 25.2 0.3 4.4

6.5 17.7 2.4 3.7

17.0 36.8 2.4 9.0

Humidity (%)

Mean Highest Lowest Standard deviation

75.1 100 21 18.3

73.2 99 24 19.0

72.3 99 22 19.2

73.5 99 22 18.7

74.5 98 21 16.8

80.8 100 27 16.4

81.1 99 47 13.8

79.6 98 42 13.6

76.8 99 41 13.7

79.0 99 34 14.4

78.3 100 24 18.5

65.3 100 18 19.4

75.8 100 18 17.5

Solar radiation

Total (MJ) Highest intensity (W/(m2))

215 669

240 736

355 886

403 947

475 1050

471 1011

483 944

491 928

380 933

312 761

243 719

261 600

4327 1050

Rainfall

Total (mm)

80.6

88.2

140.7

123.1

128.6

219.4

172.9

162.1

123.5

78.5

71.5

48.9

1438.0

Fig. 2. Standard plan from first to fifth floor of the case building.

Table 2 Summary of thermal parameters of building envelope of case building. Envelope part

Conformation

Thermal parameter

External wall

Main part: 20 mm cement mortar + 240 mm solid clay brick + 20 mm cement & lime mix mortar Thermal bridge: 20 mm cement mortar + 240 mm reinforced concrete + 20 mm cement & lime mix mortar 20 mm cement mortar + 2 mm waterproof material APP + 20 mm cement mortar + 150 mm reinforced concrete + 10 mm cement & lime mix mortar 20 mm cement & lime mix mortar + 240 mm solid clay brick + 20 mm cement & lime mix mortar 10 mm cement mortar + 100 mm reinforced concrete + 10 mm cement & lime mix mortar 10 mm cement mortar + 50 mm reinforced concrete + 100 mm cinder + 120 mm reinforced concrete Plastic frame + 5 mm single glazing windows and inner curtains

External wall: average U-value = 2.21 W/(m2 K); D = 3.50; q = 0.7

Roof Internal wall Middle floorboard Ground floorboard External windows

Roof: U-value = 3.31 W/(m2 K); D = 2.14; q = 0.7 Internal wall: U-value = 1.78 W/(m2 K) Middle floorboard: U-value = 4.35 W/(m2 K) Ground floorboard: U-value = 1.48 W/(m2 K) External window: U-value = 4.70 W/(m2 K); SC = 0.75 in winter; SC = 0.50 in summer

Note: U-value means overall heat transfer coefficient, W/(m2 K); D means thermal inertia index; q means solar radiation absorption of exterior surface of building opaque envelope; SC means shade coefficient of exterior windows.

MI (Closing the stairs): As the two stair cases are not enclosed with windows, the resulting shape coefficient is 0.4, a little higher than the requirement of the code [28]. Closing the stairs can reduce the building shape coefficient by installing 2 safety doors (building doors, not apartment doors, a total area of 8.40 m2) on the first floor and 8 windows (a total area of 25.20 m2) on the other four floors, thereby separating the stairs from the outside air. The closed stairs can function as an air cavity to protect the desirable internal microclimate from the external environment. Additionally, this

ESM will also reduce the area of the external wall and the initial input of the thermal insulation. MII (Adding extruded polystyrene (XPS) on roof): The roof is an important part of the opaque envelope, with a total area of 383.70 m2. Adding thermal insulation material on the roof will reduce the heating and cooling loads and improve the indoor thermal environment, especially for the rooms on the topmost floor. There are different optimum thicknesses of the insulation material XPS when adopted singly or together with other ESMs. ESMs with

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Table 3 Summary of thermal parameters’ change due to ESMs. No.

Energy measure

Thermal parameters’ change

MI M II M III

Closing the stairs Adding XPS on roof to improve thermal insulation of building envelope Adding XPS on exterior wall to improve thermal insulation of building envelope

M IV1 M IV2 M IV3

Substituting plastic frame + double glazed windows for old ones Substituting aluminum frame + double glazed windows for old ones Substituting thermal bridge-cut-off aluminum frame + double glazed windows for old ones Installing aluminum shutters Installing steel shutters

Shape coefficient: 0.40 ? 0.34 Roof’s U-value will reduce and D will rise as XPS thickness increases External wall’s U-value will reduce and D will rise as XPS thickness increases External windows’ U-value: 4.70 ? 2.85 W/(m2 K); SC: 0.75 ? 0.70 External windows’ U-value: 4.70 ? 3.90 W/(m2 K); SC: 0.75 ? 0.80 External windows’ U-value: 4.70 ? 3.40 W/(m2 K); SC: 0.75 ? 0.80

M V1 M V2

various XPS thickness choices for the roof are compared. The optimum thickness should be determined for the maximum energy saving and the associated CO2 emission mitigation under different boundary conditions. MIII (Adding XPS on exterior wall): As for the insulation of the external walls, it is necessary to cover all four sides of the building, a total area of 1279 m2 and 1041 m2 before and after closing the stairs respectively. Many types of insulation materials with different performance are available in the energy-efficient building materials market and here XPS is chosen to improve the insulation of the external walls. Similarly, ESMs with various XPS thickness choices for the exterior walls are compared and the optimum thickness can be determined under different boundary conditions. MIV (Replacing the poor-insulated windows (plastic frame + single glazed) with better-insulated ones): Currently, plastic frame + double glazed windows and aluminum frame + double glazed ones are the two main types of external windows with improved insulation in the market. The thermal bridge-cut-off aluminum frame is a higher standard product that mitigates the influence of the metal frame on thermal insulation. The three alternatives (M IV1, M IV2 and M IV3) are compared. Exterior windows are important parts of the building envelope and have multi-functions, such as ventilation, sound insulation, sight, direct-sunshine in winter. It implies that occupants have to purchase new windows to replace the old ones, even if energy saving is not taken into account. It is more reasonable that only the difference between the new windows and the old ones be taken as the incremental input of this ESM. Moreover, only the exterior windows of the main rooms (bed room, study room and living room) are replaced, a total area of 319.5 m2. MV (Installing external shading system): More frequently, curtains are used to help occupants to protect their individual privacy and to separate them from outside visual disturbances, as well as to reduce solar radiation in summer. With this in mind, the SC of exterior windows is assumed to be 0.50 in summer and 0.75 in winter before installing external shading systems. Currently there are many types of external shading systems in the market. Aluminum shutters and steel shutters are chosen for the building. The two alternatives (M V1 and M V2) are compared to choose the better one. The shutters are to be installed for the external windows of the main rooms in the southern, eastern and western directions, a total area of 247.5 m2. After installing the shutters, the SC of the exterior windows will fall to 0.3 in summer and 0.5 in winter. 4.2. Calculation of EnIs, EvIs and EcIs of ESMs China is struggling to reduce energy use in buildings and to improve the associated environmental impact. Nowadays, much attention is paid to energy efficiency at the building operation stage. Moreover, inspired by the concept of LCA, all ESMs’ energy

External windows’ SC: 0.50 ? 0.20 in summer and 0.75 ? 0.50 in winter

inputs and associated CO2 emissions during the processes of material production, transportation, on-site construction and final demolition should also be taken into account. Each ESM’s energy input and associated CO2 emissions in the material production stage depend on the amount of all materials used in the ESM and the materials’ unit energy inputs and CO2 emissions in this stage. The materials data, the unit energy inputs and CO2 emissions are collected from Refs. [30–35], shown in Table 4. According to statistics, the energy inputs in the material production stage accounts for about 90% of the total energy input, while those in the stages of transportation, construction and disposal amounts to 10% or so [36,37] in retrofitting buildings. In the project of refurbishing the case building, standard ESMs with local materials are used to minimize energy consumption for transportation. At the stage of on-site construction, only basic tools (for example hanging baskets) and techniques can satisfy the construction and installing of the ESMs without needing large machinery or scaffolding. Therefore, minimized energy is consumed at this stage. Finally, the ESMs’ materials would be demolished together with the main building framework, so the energy consumed in the final demolition stage can almost be neglected. As a result, it is reasonable to assume that the ESMs’ initial energy input and the associated CO2 emissions (i.e. EnIs and EvIs) are 10/9 times those in the material production stage. Since there is no reliable LCA database in China, a simplified model to predict the ESMs’ EnIs and EvIs is used in the case building. Future work will focus on the accuracy of the model by introducing more precise data. Through summarizing the experience from demonstration projects [16,17], the Ministry of Housing and Urban–rural Development of China has issued a Guide [38] to facilitate energyefficient renovation of existing residential buildings. The Guide contains detailed information on the prices of common elements in refurbishment. A survey was also conducted on the market prices of the elements in China. The prices of the common elements are summarized in Table 5. In the article, the cost data are

Table 4 Unit energy inputs and associated CO2 emissions of common building materials in the production stage in China. Material

Unit energy input (MJ/kg)

Unit CO2 emission (kg/kg)

Section steel Steel bar Aluminum Glass Timber Concrete Cement Plastic frame for windows Polystyrene Clay brick

13.3 20.3 19.3 16.0 1.8 1.6 5.5 15.0 117.0 2.0

1.4 0.92 1.02 1.4 0.2 0.1 0.9 8.69 17.25 0.2

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X. Wang et al. / Applied Energy 141 (2015) 119–130 Table 5 Prices of common elements for building energy-efficient retrofits in China. ESM

Main materials and elements

Price (RMBU/m2)

MI

Building door Plastic frame + single glazed window Roof insulation with 20 mm XPS Exterior wall insulation with 10 mm XPS Plastic frame + double glazed window Aluminum frame + double glazed window Thermal bridge-cut-off aluminum frame + double glazed window Aluminum shutter Steel shutter

900 180 44 50 80 80 540 240 150

M M M M M M M

II III IV1 IV2 IV3 V1 V2

directly cited from the market prices in 2013. In theory, EcIs would increase due to interest rates, inflation rates, and so on, which, however, are complicated to predict in China. Any added costs might be counteracted or exceeded by the increased value of the property due to the rapid economic development in China. As a result, we applied the most conservative approach, where all variations are not considered. Moreover, many residents are not familiar with economic predictions, so the simplest approach can be understood and accepted easily is needed. The ESMs’ EnIs and EvIs are calculated according to Table 4, the detailed quantities of the materials used in the ESMs and the above analysis, while the ESMs’ EcIs are calculated according to the detailed quantities and the prices of the elements in Table 5. The results are shown in Table 6. 4.3. Calculation of Ens, Evs and Ecs of ESMs The annual energy saving is predicted to assess the ESMs’ Ens, Evs and Ecs at the building operation stage. Through (1) inputting the case building’s thermal attributes before and after retrofit, (2) setting heating and cooling coefficients of performance (COP) of central electric appliances (1.9 for heating and 2.3 for cooling), (3) setting a comfortable temperature in the bedrooms and living rooms (not higher than 26 °C in summer and not lower than 18 °C in winter), (4) setting the air change rate (once per hour), and (5) inputting a typical year’s weather for Hangzhou city, DOE-2 is used to calculate the heating and cooling loads before and after a retrofit. The heating and cooling loads of the case building are 61.80 and 22.71 kWh/m2 respectively before a retrofit. However, the residents’ lifestyles strongly influence the energy use in residential buildings [39]. The difference between the actual residents’ lifestyle and the assumed-lifestyle in DOE-2 results in a big discrepancy in the annual energy saving. According to the Table 6 EnIRs, EvIRs and EcIRs of ESMs.

Note

Increasing by 4 RMBU/m2 with every 5 mm XPS increase After subtracting the price of plastic frame + single glazed window (i.e. 180 RMBU/m2)

investigation reported in [39] and the increasing trend of energy consumption [18], the actual heating and cooling loads of the building are assumed to be 6.23 and 7.60 kWh/m2 respectively in 2013, far less than the simulation results. Thus, the effect of residents’ lifestyle on energy use should be taken in account. The residents’ lifestyle discussed here mainly refers to the duration between turning on the ACs and the indoor setting temperature to turning on/off the ACs. In fact, the period of operating the ACs is shorter than that in simulation. There are two turn on points for ACs in DOE-2, 18 °C (lower limit) in winter and 26 °C (upper limit) in summer. In practice the indoor temperature is often lower than 18 °C in winter and higher than 26 °C in summer, and the families in the building had a great diversity of lifestyles in many aspects, especially in comfort requirements, energy behavior, etc. Thus, the model combines the simulation results with the actual energy consumption to calculate the annual energy savings of the ESMs. The relative values of the energy-saving effects in fact are assumed to be the same as those in the simulation, shown as Eq. (7) [10].

Ri ¼ ðE0Si  ES Þ=ES ¼ ðE0Fi  EF Þ=EF

ð7Þ

Ri: the relative value of energy-saving effect of the ith ESM on reducing the heating load or cooling load. E0 Si: the heating load or cooling load after a retrofit according to the ith ESM in simulation. ES: the heating load or cooling load in simulation. E0 Fi: the possibly factual heating load or cooling load after a retrofit due to the ith ESM. EF: the factual heating load or cooling load. The unknown parameter E0 Fi can be calculated by Eq. (7) and thereby the annual energy saving of the ith ESM can be calculated more accurately.

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Currently, the rebound effect has been recognized all over the world [40] and has attracted much attention in China [41]. The rebound effect means that residents are likely to change their lifestyle after a retrofit to have more relaxation, more comfort and a healthier indoor environment. Therefore, the actual benefits from a retrofit are often less than expected, but rebound effect does not reduce the relative values of the energy-saving effects of ESMs. On the contrary, the increased absolute value of the energy demand induced by lifestyle changes will increase the absolute values of energy savings of the ESMs. In addition, the magnitude of the rebound effect in the residential sector in China is difficult to estimate at present. Hence, rebound effect after retrofitting is not considered in the assessment of the ESMs’ energy savings. The Hangzhou statistical yearbook-2012 shows that along with economic development, the energy consumption of the household sector is experiencing a continual and rapid increasing process to satisfy the demands for a higher quality of life in recent years [42]. It means that even without renovation and the rebound effect, residents will change their lifestyle for higher living standards accompanied with increased energy consumption. Thus the absolute annual energy saving for heating and cooling loads of any ESM will increase with the growth of energy demand, if the relative energy-saving effects of the ESMs are kept constant in the residual life cycle after retrofit. With this in mind, the increase rate of the annual energy saving of each ESM is assumed to be 2% in the building’s residual life cycle according to the increase rate of the residential energy consumption [42]. Residential buildings are designed to operate for at least 50 years according to the code [43] in China, so the residual life cycle of the building is expected to be 20 years after a retrofit in 2013. Hence, the lifetimes of the five ESMs have to be 20 years, although M II can last 40 years. Currently in China, the generation of 1kWh electricity consumes 11.72 MJ energy and emits 0.93 kg CO2 [30]. 1kWh electricity costs 0.638 RMBU in the private sector in Hangzhou [18]. Based on the above data and analysis, the ESMs’ energy savings, associated CO2 emission mitigation and economic returns in residual 20-year lifecycle of the building (i.e. Ens, Evs and Ecs) are calculated and the results are shown in Table 6.

II > M I > M III > M IV1 > M V2. Decision-makers can select a rational proposal according to the hierarchy. For instance, if the investment budget is limited, M II, M I and M III should be adopted, while M IV1 and M V2 should be reconsidered later. 4.5. Optimization of energy-efficient retrofit plan Due to the interactions among ESMs, the optimum XPS thicknesses of M II and M III might vary under different boundary conditions. Hence, firstly M I, M IV1 and M V2 should be adopted, if enough funds can be provided to accept the five ESMs to refurbish the case building. Secondly, because the EnIR, EvIR and EcIR of M II are higher than those of M III as shown in Table 5, the XPS thickness of M II will be optimized after M I, M IV1 and M V2 have been adopted. The EnIRs, EvIRs and EcIRs of M II with different XPS thicknesses are calculated, shown as Fig. 3. M II still can attain the greatest benefits among the five ESMs, and its EnIR, EvIR and EcIR will be reduced with increase of the XPS thickness. Thinner XPS can gain more benefits, but the XPS thickness of the roof has to satisfy the minimum thermal performance according to the code [28] (i.e. Uvalue 6 1.0 W/(m2 K) and D P 3.0, or U-value 6 0.8 W/(m2 K) and D P 2.5), so the XPS thickness is determined to be 35 mm. Thirdly, the XPS thickness of M III will be optimized after the adoption of M I, M II with 35 mm XPS, M IV1 and M V2. The EnIRs, EvIRs and EcIRs of M III with different XPS thicknesses are calculated, shown as Fig. 4. The optimum XPS thickness of the exterior walls can be determined to be 25 mm for its highest EnIR and EvIR, and can satisfy the minimum thermal performance of the exterior walls [28] (i.e. U-value 6 1.5 W/(m2 K) and D P 3.0, or Uvalue 6 1.0 W/(m2 K) and D P 2.5).

4.4. Calculation and analysis of EnIRs, EvIRs and EcIRs of ESMs Through Eqs. (1)–(3), the EnIRs, EvIRs and EcIRs of the five ESMs are calculated and the results are shown in Table 6. The findings are summarized based on Table 6 as follows: (1) M I can achieve significant energy-saving, and environmental and economic benefits. Each 1 RMBU of investment cost will save 21.90 MJ of energy, reduce CO2 emissions by 1.66 kg and gain 0.25 RMBU of pure profit, so M I should be adopted. (2) M II can attain the greatest benefits among the five ESMs, so M II should be adopted firstly in theory without the consideration of the interactions among ESMs [44,45]. Its EnIR, EvIR and EcIR will be reduced with the increase of XPS thickness. (3) M III can gain a lot of energy-saving and environmental benefits, but its EcIR is negative. The optimum XPS thickness is 20 mm. (4) Among the three alternatives of M IV, plastic frame + double glazed window (i.e. M IV1) is the best type for exterior windows, but the EcIRs of all the alternatives are negative. (5) Between the two alternatives of M V, the steel shutter (i.e. M V2) is the better type for an external shading system, but the EcIRs of both alternatives are negative too. (6) In terms of EnIR, EvIR and EcIR, the prioritizing order of the five ESMs can be determined without doubt as follows: M

Fig. 3. EnIRs, EvIRs and EcIRs of M II with different XPS thicknesses.

Fig. 4. EnIRs, EvIRs and EcIRs of M III with different XPS thicknesses.

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Finally, the optimum energy-efficient retrofit plan is determined. It is called P I and includes M I, M II with 35 mm XPS, M III with 25 mm XPS, M IV1, and M V2. If this plan is adopted to refurbish the building, its energy consumption for space heating and cooling will be reduced to 9.57 kWh/m2 annually. So the adoption of P I can reduce operational energy use by 30%, beyond the requirement of the code [28] on building envelope improvement (i.e. 25% energy saving). Moreover, each 1 RMBU in the investment cost will save 15.04 MJ of energy and reduce CO2 emissions by 1.13 kg (shown in Table 7). 4.6. Comparison If the thicknesses of the thermal materials on the roof and exterior walls are determined at random within the framework of the code [28] on the performance of building envelope, the energy-saving and environmental benefits cannot be maximized or be close to those of P I. A comparison plan P II, assembling M I, M II with 40 mm XPS, M III with 10 mm XPS, M IV1 and M V2, is selected. The results in Table 7 indicate that the EnIR, EvIR and EcIR of P I are higher than those of P II. If the interactions among various ESMs are not considered, the XPS thickness of the exteriors wall is determined to be 20 mm according to the results in Table 6 and the final plan will follow M I, M II with 35 mm XPS, M III with 20 mm XPS, M IV1 and M V2, called P III here (shown in Table 6). P I needs a little more investment cost than P III, but can gain more energy-saving benefits for the same cost. Hence, P I is the best among the three plans for upgrading the building. Thus, the values of EnIR, EvIR and EcIR do not only determine the hierarchy of the available ESMs, but they also optimize energy-efficient plans. 4.7. Calculation and analysis of EnIgR, EvIgR and EcIrR of the energyefficient retrofit plan In general, the stairs, exterior walls and roof are considered as common property for all households in the building, while the exterior windows are regarded as private property of individuals. Hence, the investment costs of M I, M II and M III should be allocated to the government with the EcIg amounting to 98,125 RMBU, while those of M IV1 and M V2 should be distributed to the residents with the EcIr equal to 62,685 RMBU . According to Eqs. (4)–(6), the EnIgR, EvIgR and EcIrR of P I are calculated and the results are shown in Table 8. If the building had been refurbished by adopting the optimum plan (P I), the Ministry of Finance of China should subsidize

Fig. 5. Distribution of investment cost for adoption of P I in upgrading the case building.

28,778 RMBU in total [15]. The local government of Hangzhou should undertake to provide 69,347 RMBU , a heavy financial burden. They, however, might become more satisfied, if EnIgR and EvIgR rather than EnIR and EvIR are offered, because EnIgR and EvIgR are much higher than EnIR and EvIR respectively. Residents have to commit 62,685 RMBU , about 44 RMBU /m2 or 3134 RMBU /household on average. However, if EcIrR rather than EcIR is offered, residents might become interested in participating and investing in upgrading their building, because they not only can retrieve all the input, but also gain 1.41 RMBU pure profit for each 1 RMBU input. Fig. 5 displays the detailed distribution of the investment cost for the adoption of P I. 5. Win–win model The negative value in EcIR of the optimum plan (P I), shown in Table 7, proves again that financial payback will never be achieved due to the low energy price in the household sector of China. Researchers have suggested that a multi-channel financing model should be developed to attract investment and financing jointly from the state, enterprises and individuals [7,20]. However, without sufficient tangible economic profits, no enterprise would spontaneously invest in retrofitting. Demonstration projects are special examples and cannot be popularized for more aging residential buildings. Political interference also cannot become a long-term approach, although its effect cannot be denied completely. Lv et al. thought governments should apply market-oriented means to promote the development of the policy of upgrading aging residential buildings [16]. As a result, based on the results in the case study, a ‘‘win–win’’ model is proposed, in which both the govern-

Table 7 Comparison of P I, P II and P III. Plan no. P P P P P P

EnI (GJ)

En (GJ)

EvI (kg)

Ev (kg)

I 331.38 2776.92 40,703 225,076 II 281.81 2147.56 33,396 174,065 III 312.54 2692.07 37,926 218,199 I: M I + M II(35 mm XPS) + M III (25 mm XPS) + M IV1 + M V2 II: M I + M II(40 mm XPS) + M III (10 mm XPS) + M IV1 + M V2 III: M I + M II(35 mm XPS) + M III (20 mm XPS) + M IV1 + M V2

EcI (RMBU)

Ec (RMBU)

EnIR (MJ/RMBU)

EvIR (kg/RMBU)

EcIR (RMBU/RMBU)

151,157 116,898 146,538

160,810 149,853 156,646

15.04 12.29 15.03

1.13 0.92 1.13

0.06 0.22 0.06

Table 8 EnIgR, EvIgR and EcIrR of P I. Plan no.

En–EnI (GJ)

Ev–EvI (kg)

Ec (RMBU)

EcIg (RMBU)

EcIr (RMBU)

EnIgR (MJ/RMBU)

EvIgR (kg/RMBU)

EcIrR (RMBU/RMBU)

PI

2418.27

181,124

160,810

98,125

62,685

24.64

1.85

1.41

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ment and residents can co-invest in and co-benefit from refurbishment. First of all, the principle of the model is ‘‘who invests in the retrofit should get the rewards’’, consistent with the general rule of ‘‘who benefits? who invests!’’ in the market economy. The government at different levels is authorized by the nation and all society in China, responsible for saving energy and mitigating CO2 emissions, as well as improving the livelihood of the people by upgrading aging residential buildings. House owners are by nature investors. Improvement of the indoor thermal environment will not only lead a remarkable reduction in the domestic budget, but will also improve public health and raise the economic value of their buildings [46]. All share in the benefits of energy-efficient retrofitting, should therefore share the bill too. We can consider the government at different levels as the members in the market mode from this viewpoint. Hence, the modified ratios of EnIgR, EvIgR and EcIrR are in agreement with the distribution of both the benefits and the investment cost. In the government-led mode, local governments play a decisive role in energy-efficient retrofit projects. Before renovation, both local governments and residents hardly understand the benefits of refurbishment. The modified ratios should be shown in advance to stimulate their enthusiasm so as to spontaneously invest in such projects. If the government can entice residents to invest together, EcIg should be less than EcI, and EnIgR and EvIgR should be more than

EnIR and EvIR respectively. For the government, energy-saving and environmental benefits will be improved. It implies that the financial burdens can be mitigated to some degree and the tasks can be completed more successfully and smoothly. Government-led retrofitting is the main mode accepted by most residents. 76.78% of residents had expressed their willingness to participate, as long as governments covered over 30% of the total investment cost [19]. EcIr should be lower than EcI, thus EcIrR should be higher than EcIR, which means that the residents’ financial benefit will be magnified significantly. They will become more interested in investing if they have fully realized so much economic benefit can be gained from upgrading their buildings [47]. Hence, the modified ratios are applicable in overcoming the barriers of financing difficulties, and prove that the ‘‘win–win’’ model is a reliable decision-making tool for improving aging residential buildings retrofitting in China. As the actual executors of the energy policy, local governments have to confront the financing difficulties and ask for house owners to cooperate. The ‘‘win–win’’ model can help local governments to implement the policy more smoothly. In a word, the model with the ratios should be introduced not only to optimize energy-efficient renovation plans, but also to mobilize local governments and residents to co-invest, shown as Fig. 6. Additionally, the price of electricity is controlled by the government, not by the market. The government has already biased the market of energy-efficient retrofitting of existing residential build-

Fig. 6. The win–win model with the ratios in existing residential building retrofitting projects.

X. Wang et al. / Applied Energy 141 (2015) 119–130

ings, so they should be responsible for correcting the error by providing subsidies to promote the energy policy of upgrading aging residential buildings in China. In conclusion, the win–win model is validated and can be regarded as an appropriate market model.

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Education Ministry (No. 2012940-15-8). We would like to thank the anonymous reviewers and the editors for their valuable suggestions and comments.

References 6. Conclusions Upgrading aging residential buildings is an important energy policy for energy saving and CO2 emission mitigation in China. In the government-led mode, financing difficulty is the biggest obstacle in promoting the policy. In this article, by improving the benefit-cost analysis, novel indices (i.e. EnIR, EvIR, EcIR, EnIgR, EvIgR and EcIrR) are proposed to overcome the obstacles and a fully new financing model consistent with market principles is also developed to promote this policy. Firstly, the ratios of EnIR, EvIR and EcIR are developed to rank available ESMs in terms of cost-effectiveness; Secondly, in response to the actual situations in upgrading aging residential buildings in China, the ratios are respectively modified to EnIgR, EvIgR and EcIrR in the assessment of the final energy-efficient retrofit plans. Then, a building in Hangzhou is employed as a case study to elaborate the usage of the ratios. Finally, based on the application results in the case study, a ‘‘win–win’’ model using the ratios is developed to absorb funds for renovation. Some conclusions can be drawn as follows: (1) The ratios of EnIR, EvIR and EcIR can help to integrate the most cost-effective ESMs into an optimum plan for the subject building, so limited funds can be used to save more energy and reduce more CO2 emission, so that the financing difficulties will be eased to some degree. (2) The modified ratios of EnIgR, EvIgR and EcIrR correctly reflect the actual situations of the government and residents. The ratios help them fully realize the benefits from the adoption of the optimum plans. The government, undertaking most of the investment cost, focuses on energy and environmental efficiency. Residents share part of the investment cost and enjoy all the economic benefit, besides improvement of the functional quality of their buildings. The modified ratios will ‘‘attract’’ the government and residents to participate, to cooperate and most importantly to co-invest, so the financing difficulties can be solved. (3) The ratios facilitate the development of a ‘‘win–win’’ model, in which the government and residents should co-invest in and co-benefit from refurbishment. Therefore, EnIR, EvIR and EcIR should be introduced into the determination of energy-efficient building retrofit plans, while EnIgR, EvIgR and EcIrR should be offered to mobilize the government and residents to co-invest. The ‘‘win–win’’ model complies with the general rule of ‘‘who benefits? who invests!’’ in the market economy and proves to be a correct market model. The ratios prove that the model can be an effective decision-making tool to promote the energy policy of upgrading aging residential buildings in China. In our further work, we will develop an optimization algorithm based on the ratios. A number of factors of varying economic conditions (inflation, interest rates, etc.) will also be taken into account in the algorithm, so it can be more applicable in market modes of building energy efficiency. Acknowledgements The work in this paper was supported by the Scientific Research Foundation for the Returned Overseas Chinese Scholars, State

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