Exploring key risks of energy retrofit of residential buildings in China with transaction cost considerations

Abstract

Energy retrofit of residential buildings is an approach to reduce worldwide energy consumption. Residential energy retrofitting in China mostly focuses on multi-owner residential buildings with composite ownership that dozens of private homeowners own their apartment and jointly own the common parts of a building. The implementation of residential energy retrofit faces many risks, causing the slow retrofit process in the hot summer and cold winter (HSCW) zone of China. Transaction cost theory (TCT) is conducive to enrich an in-depth understanding of risk inventories in the energy retrofitting context. This paper aims to explore the key risks in retrofit projects of residential buildings in the HSCW zone with transaction costs (TCs) considerations, in order to provide the direction for effective risk management. First, based on the theoretical risks with TCs considerations, interviews were conducted to adjust the risk list and to connect these risks with stakeholders and stages. Second, a questionnaire survey was made based on two parameters of risk probability and severity, and then ten top risks were chosen as key risks through both a risk matrix and Borda count. The results show that most of the key risks are associated with homeowners and contractors, involving retrofit awareness, cooperation performance, opportunism, professional expertise, construction management, safety management, and maintenance, of which most occur at the stage of on-site construction. Information cost is the largest source of TCs relevant to these key risks and is mainly borne by the government and homeowners. TCs can also provide a lens for the retrofitting in other countries to understand risks, and the decrease in information costs contributes to effective risk management both in China and in the international context.