Investment planning in energy efficiency programs: a portfolio based approach

Carla Henriques, Dulce Helena Coelho and Maria Elisabete Duarte Neves
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Dulce Helena Coelho: INESCC
Maria Elisabete Duarte Neves: Polytechnic Institute of Coimbra

Operational Research, 2022, vol. 22, issue 1, No 21, 615-649

Abstract: Abstract The Portuguese energy efficiency programs are usually run through grant awards that support energy efficient technologies, which require the establishment of rational investment plans considering distinct budget level inputs to each program. The current evaluation of energy efficiency programs mainly relies on the economic analysis of demand-side programs and projects. One of the weaknesses of this type of approach is that it cannot capture the complexities of decision-making processes, mainly relying on the device costs targeted for funding. This paper aims at developing a methodological framework to support public authorities in investment planning for energy efficiency programs based on portfolio theory explicitly considering the energy spent in the manufacturing and installation of each energy efficient technology. The applicability of the methodology herein proposed is illustrated by considering the potential investment in distinct portfolios of industrial lighting systems. Finally, a new solution methodology for computing possibly efficient solutions is also suggested which allows exploring distinct types of investment strategies, according to the public investor’s preferences. Our findings suggest that LED lamps and T5 technologies should be considered as a valid option for replacing T8 and HPS technologies. Additionally, despite the investment cost involved in the installation of light control systems, they should be elected for funding. Finally, it is worth mentioning that the substitution of T8 and Halogen lamps with LED lamps has never been considered with the modelling framework used in spite of being effectively selected for public support, highlighting the need of adopting approaches that encompass a life-cycle perspective.

Keywords: Multiobjective interval portfolio programming; Energy efficient lighting systems; Economic input–output life-cycle assessment; Energy payback time; 91G10; 90C29; 65G40; 93D25 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s12351-020-00566-6

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