Energy Services in Shanghai

Abstract: The People’s Republic of China (PRC) is one of the fastest growing economies in the world. However, the economic expansion is not without complications. Improved standard of living and a growing industrial sector have led to an increased demand of energy, which in turn is contributing to air pollution and land contamination. The research problem of the study is what is keeping existing Energy Services (ES) in Shanghai from being used more frequently. To answer this, a sequential mixed method study is conducted, divided into a qualitative and quantitative part. The literature study indicates a great potential for ES in Shanghai. This is mainly due to great efforts taken in Energy Efficiency (EE), an attempt to face the rapidly increasing population by reducing the usage of energy. A number of barriers for ES are found throughout the existing literature, including market, financial, institutional as well as technological barriers. To further investigate barriers and opportunities on the ES market in Shanghai, 14 semi-structured interviews with relevant stakeholders and academics were conducted. Hypothesizes were formulated based on results from the interview and literature study as well as an expert panel. To test the hypotheses a questionnaire was sent out to real estate developers in Shanghai. This study discovers the need of bringing several in the literature identified barriers to ES in Shanghai up to date. Some barriers were found to be invalid while others were not identified at all. The newly found barriers include market barriers, such as ES having low priority, poor technological understanding among clients, and complications approaching and communicating with potential clients.  For institutional barriers, it was found that the prevalence of low margins in the Chinese industries is holding back stricter regulations. Furthermore, the Energy Service Companies’ (ESCO) lack of understanding of ES from a system perspective is considered a technology barrier. In addition to the barriers, a number of opportunities were found. Improved communication between real estate stakeholders and ESCOs contribute to greater awareness and knowledge, which in turn leads to a higher degree of investment in ES. Differentiation of the services offered by ESCOs may attract new customers who previously were not interested, e.g. companies with short investment horizon. In Shanghai, there are a significant number of subsidies, regulations and laws favoring ES. Moreover, the rapid growth of Shanghai is considered one of the greater opportunities. To conclude, it was found that the maturity level among ESCOs in Shanghai was having large impact on the overall usage of ES. Fixed barriers, i.e. barriers nearly impossible to overcome, together with the large amount of small and inexperienced ESCOs is found to be hindering ES in the Shanghai commercial real estate sector from being used more frequently.