Abstract
How does the issue of the discount rate intersect the research on building energy efficiency and the topics into which it has branched? This contribution tries to answer the previous question through a comprehensive review of related studies. Those studies usually rely on two alternative assumptions. The first refers, explicitly or implicitly, to the notion of cost of capital and, hence, to the position of private stakeholders involved in the decision processes focusing on the adoption of energy-efficient measures in buildings. The second assumption relates to the notion of the social discount rate, which is meant to pursue intergenerational equity and environmental sustainability. As far as the results are concerned, the literature agrees that the discount rate is among the key parameters—possibly the most prominent—affecting the evaluation. However, despite the crucial role it plays, its calculation seldom relies on acknowledged methods and models. Furthermore, data sources sometimes lack consistency and accuracy. Some guidance and suggestions are provided as to the improvement of the discount rate estimation.
Highlights
Introduction and methodological backgroundBuilding energy efficiency has established itself as a promising research strand at least starting from the early eighties, in the wake of the oil price shocks experienced during the seventies and the adoption of the first regulations in the matter in several countries [1]
How does the issue of the discount rate intersect the research on building energy efficiency and the topics into which it has branched? This contribution tries to answer the previous question through a comprehensive review of related studies
The primary question which this study aims to address may be summarized as follows: how does the topic of the discount rate intersect with the research strands focusing on building energy efficiency? The discount rate is among the parameters required to perform that kind of economic analysis that involves values variously distributed across time
Summary
Introduction and methodological backgroundBuilding energy efficiency has established itself as a promising research strand at least starting from the early eighties, in the wake of the oil price shocks experienced during the seventies and the adoption of the first regulations in the matter in several countries [1]. The studies dealing with the economic feasibility and viability of the measures meant to improve the energy performance of buildings play a prominent role [21]. Those studies rely on a long-standing set of methods and models, such as the Discounted cash flow analysis [22,23,24,25,26], the Life-cycle cost analysis [27,28,29,30,31,32,33,34], and—more recently—the Cost-optimal methodology [35,36,37]. The corresponding values are, non-homogeneous and require to be discounted back to the present to determine the current worth of the analyzed solutions
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