Volume 10: Sustainable Energy Solutions for Changing the World: Part II

DEVELOPMENT OF DECISION-MAKING MODEL FOR ADOPTING RENEWABLE ENERGY BASED ON TRIPARTITE EVOLUTION GAME THEORY ANALYSIS Hakpyeong Kim, Taehoon Hong, Hyuna Kang

Abstract

For the adoption of renewable energy to buildings that consume a lot of fossil fuel-based energy, the government, environmental service company, and consumers have organized for the Private-Public-Partnership (PPP) project encouraging private buildings to install renewable energy generators. However, the majority of the building owner is unwilling to install renewable energy generators to their buildings because of high initial investment cost, low rate of return, and long payback period. Most of the previous studies analyzed the economic benefits of PPP projects for adopting renewable energy generators in residential buildings, but they rarely present any decision-making model to support choosing an appropriate strategy and the optimal incentive and penalty rate. To fill the gap, this study aims to construct the decision-making model for implementing PPP projects from a three-participant perspective through evolutionary game theory. This study firstly collected background costs and benefits information related to renewable energy adoption PPP projects. Secondly, this study analyzed the evolutionarily stable strategy of each participant. Finally, the decision-making model was proposed to support choosing an appropriate strategy for accomplishing a win-win solution from each stakeholder.

Keywords Renewable energy, Public-Private partnership, Evolutionary game theory, Financial Incentive, Penalty