Understanding Governments, ESCOs, and Clients’ Behavioral Strategies in Public Building Energy-Efficiency Renovation Based on Evolutionary Game Theory

Energy performance contracting (EPC) overcomes the financial and risk barriers hindering energy conservation. The public building sector possessing the energy-intensive nature embraced this mode but is far from its market potential due to the complex interaction and different interests for decision making among stakeholders. This study establishes a tripartite evolutionary game model based on the assumptions of bounded rationality and the interaction behavior of energy service companies (ESCOs), clients, and governments to examine how strategies are changing for three stakeholders. Particularly, public buildings are categorized as commercial and noncommercial public buildings since they share different considerations. The effect of the initial state, potential loss, social pressure, governmental subsidies, and penalties on EPC adoption are examined. Results demonstrate that: (1) overestimated potential loss by clients is the critical hindrance to EPC adoption; (2) ESCOs’ development relies on governmental subsidies in the initial stage when both parties show little willingness; and (3) government penalties exert a pronounced influence in regulating stakeholders’ behavior; nevertheless, their efficacy diminishes notably as the market attains a state of relative maturity. This research may contribute to the current understanding of the interactions of stakeholders in EPC projects, as well as provide valuable policy implications for the governments to promote ESCO industry development.