Developing and managing photovoltaic facilities based on third-party ownership business models in buildings

Abstract

Purpose The purpose of this paper is to demonstrate the growing trend of developing and managing photovoltaic facilities owned by third parties in buildings, as a possible alternative to energy performance contracting. Design/methodology/approach Based on an established business model template, analysis is carried out on the framework of using third-party finance in the provision of photovoltaic facilities in buildings. Case studies in the USA and China enable comparison of policy tools enabling this approach. Findings While barriers exist in the common energy performance contracting approach for renewable installations owned by the building owner, vesting photovoltaic equipment with a third party for a certain period has become a viable business alternative as long as revenue is generated through a power purchase agreement or lease arrangement with the building owner. Research limitations/implications The third-party ownership business model works better if sufficient policy incentives exist alongside the revenue brought about by renewable energy. Hence, governments have to create the right environment. Originality/value Win-win situations have been identified through case studies in countries with burgeoning renewable energy use in buildings, notably the USA and China, giving new insights on facilities management.