The economic viability of a progressive smart building system with power storage

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Journal Title
Journal ISSN
Volume Title
A1 Alkuperäisartikkeli tieteellisessä aikakauslehdessä
Date
2020-08
Major/Subject
Mcode
Degree programme
Language
en
Pages
18
Series
Sustainability (Switzerland), Volume 12, issue 15
Abstract
The increased smartness of the built environment is expected to contribute positively to climate change mitigation through energy conservation, efficient renewable energy utilization, and greenhouse gas emission reduction. Accordingly, significant investments are required in smart technologies, which enable the distributed supply of renewables and increased demand-side energy flexibility. The present study set out to understand the cash flows and economic viability of a real-life smart system investment in a building. The data collection process was threefold: First, a case building's level of (energy) smartness was estimated. Second, the semi-structured interviews were held to understand the building owner's motives for a smart investment. Third, the investment's profitability was analyzed. The study found that the progressive smartness investment was technically feasible, and surprisingly also economically profitable. The original EUR 6 million investment provided over 10% return-on-investment and, thus, increased the property value by more than EUR 10 million. Moreover, the commercial partners also emphasized the strategic value gained by renewable energy and environmental performance. The high level of smartness with a good return on investment was accomplished mainly through new income generated from the reserve power markets. However, the results implied that financial profitability alone was not enough to justify the economic viability of a smart building system investment.
Description
Keywords
Discounted cash flow analysis, Energy storage, Investment profitability, Investor motives, Renewable energy resources, Reserve power system, Smart building, Smart energy system, Smart readiness indicator
Other note
Citation
Janhunen , E , Leskinen , N & Junnila , S 2020 , ' The economic viability of a progressive smart building system with power storage ' , Sustainability (Switzerland) , vol. 12 , no. 15 , 5998 . https://doi.org/10.3390/su12155998