Stackelberg game analysis of the energy performance contracting considering altruistic preferences

Abstract

The Stackelberg game analysis of an Energy Performance Contracting(EPC) is established to correctly analyze the impact of altruistic preference behaviors on the decision-makers, energy service companies(ESCOs) and energy-consuming units(EUs). Its motivation comes from the fact that, to achieve a win-win situation, EUs usually engage in altruistic behaviors, but the implementation results of the EPC are always contrary to their expectations. Using nonlinear optimization theory, analyzed the decisions of the Stackelberg models under different altruistic preference attributes, and then compared the impacts of altruistic preferences on decisions and profits. Results reveal: (1)compared to a situation lacking altruistic preference, when the leader, the EU, has an altruistic preference, the EU only needs to transfer a small part of its own interests to significantly increase the ESCO's profit and ultimately improve the overall EPC profit; (2) the altruistic preference of the ESCO functions akin to a "poison," engrossing the company in the satisfaction derived from the increased revenue of the energy-consuming entity and gradually eroding its own profits; and (3)the altruistic preference behavior of both parties is a kind of “benefit transfer behavior,” which is conducive to stable operation and long-term development of EPC industry. The research results can provide a theoretical reference to enhance the development of energy-saving service industry.