Evolution of China’s Building Energy Service Industry Based on Synergetic Theory

Abstract

Global climate crises are forcing the world to behave sustainably. The building energy service industry (BESI) emerged and promoted building energy conservation by providing a market-oriented mechanism for initial investment. However, the BESI lacks scientific and rational planning, lagging far behind the energy service in the industrial sector. This paper attempts to analyze BESI from the perspective of order parameter-based analysis by adopting the DEMATEL (Decision-Making and Trial Evaluation Laboratory) method, thereby revealing the characteristics of industrial evolution and ascertaining the main order parameters. Consequently, the results show that the evolution of the BESI industry relies on synergistic interaction in the corporate operation, industry-standard, production factor-related, and external environmental industry subsystems. The synergy of the BESI consists of synergy in subsystems, between subsystems, and between the system and the external environment. Three main order parameters dominating the evolution of the BESIs system are determined, namely, “financial support”, “industry standard”, and “technology innovation”. Financial support and industry standard drove the development of the BESI in China over the last few years, while technological innovation will lead its evolution in the coming years. Based on these results, policy suggestions can be proposed to foster BESI development, especially regarding technological innovation.

1. Introduction

With the rapid economic growth and industrialization in the last decades, China has become the engine of the world’s economic growth, leading to a dramatic increase in energy consumption and carbon emissions [1,2,3,4]. The building sector is a critical contributor to China’s energy consumption, whose energy consumption in a given life-cycle accounts for over 40% of China’s total energy use and carbon emissions. Currently, more than 90% of the existing buildings in China are highly energy consumptive. Thus, China’s existing building energy consumption per unit area is about two times that of developed countries under the same environmental conditions [5]. In this circumstance, there is great potential for additional energy conservation in the building sector. Since the 1980s, energy conservation has been a key point of China’s development strategy due to the influence of persistent energy shortages [6,7]. More recently, it became the main plank of China’s government in terms of dealing with climate change [8,9,10]. The Chinese government has invested a large amount of its budget into work on energy efficiency and consumption reduction and has introduced a series of energy conservation policies, which are especially prevalent in the 13th FYP [11,12,13]. However, although a series of building energy conservation policies has been published, the achievements are far from satisfactory. The government, especially the local governments, still rely on finances to promote energy-saving work because of funding shortages [14]. The Chinese government has been promoting the concept of EPC (Energy Performance Contracting), which provides a market mechanism to deliver energy-efficient projects, including energy savings guarantees and associated design and installation services [15]. After decades of development, the ESCO industry still heavily concentrates on the industrial sector, with only 20% of the total investment in the building sector, which is far away from its potential [16]. This situation is precipitated by massive barriers that hamper the development of the building energy service industry (BESI), including a lack of scientific and rational planning, low public awareness, limited project scales, and insufficient financing channels [17,18,19]. BESI is composed of energy service companies, building owners, governments, building occupants, energy audit agencies, and others; thus, it is a very complex system. The operation mechanism of the BESI is a “black box” that involves the abovementioned stakeholders. Most previous research focused on the assessment and evaluation of the BESI, or explored the application of emerging technologies in the BESI, which neglected the BESI itself, neglecting to address aspects such as the system structure, operation mechanism, and other fundamental elements [20]. Such a lack of clarity on the theoretical issues of the BESI has led to a hindrance in the advancement of its practice. It is essential to understand the evolutionary mechanism and promote the development of the BESI to reach climate goals and energy conservation targets.

Several researchers proposed the synergetic theory to explore the development of industries and apply the “order parameter” to determine the driving force that guides the development of the industry [21,22,23]. Synergetic theory proposes that all open systems can be viewed as forms of self-organization, wherein the driving force is formed through interconnection and interaction among several and even all driving force factors [22]. These driving factors are called order parameters in synergetic theory [24]. Once the order parameters are formed, they play a dominant or utilization system-related role, dominating the overall system evolution process. As a typical open system, the BESI system can be explored by synergetic theory, which is driven by the interconnection and interaction between order parameters. Though synergetic theory can effectively aid analysis of the BESI system, to the best of our knowledge, previous research has not investigated the evolution of the BESI system through synergetic theory. There is a lack of knowledge about what the order parameters are and how they drive the BESI system. Therefore, this study attempts to utilize synergetic theory to explore the evolutionary mechanism of the BESI system and determine its driving force, that is, the order parameter in synergetic theory that guides industrial development, and tries to provide scientific and rational strategies. Through the analysis of the BESI system’s structure and synergism between subsystems, this paper utilized the DEMALE approach to determine the corresponding order parameters. Specifically, two main research questions were addressed:

(1)

What are the main order parameters that can drive the BESI system through the perspective of synergetic theory?

(2)

How do the order parameters influence the BESI system and subsystems?

The remaining sections of this study are structured as follows: the next section contains a literature review of synergetic theory and BESI in China. In Section 3, the BESI system’s structure, the data collection process, and the quantitative analysis approach are detailed. In Section 4, the order parameters of the BESI system are determined. The final section presents the discussion and conclusions.

2. Literature Review

2.1. Self-Organization, Synergism, and Order Parameter

Systems theory demonstrates that all things exist in systematic forms, and systematic methods can be used to interpret their characteristics [25]. Most systems in the real world are regarded as self-organization systems, including the economic system, organization management, and technological innovation [26,27]. A self-organization system must have four important conditions: openness, non-linearity, a non-equilibrium state and fluctuation, and spontaneous ordering tendencies.

Self-organization theory consists of several parts, among which synergism is the most commonly adopted in dealing with systems composed of many subsystems [22,23,28]. Synergism involves the nonlinear interactions between subsystems, which will lead to the ordered evolution of the whole system. The main idea of synergism is how an open, erratic system evolves from a disordered structure to an ordered state or from one ordered state to another under certain external conditions [29]. In a complex and dynamic system, the individual parts cooperate with each other by means of self-organization. Thus, they produce structures or functions at the macroscopic level, which drive the system’s evolution. The synergetic theory demonstrates that the order parameter plays a vital role during the process of developing from disorder to order, which is the product of the interaction between factors in the system [30,31]. Once the order parameter is shaped, it governs the change of other parameters and the behavior of subsystems, thus dominating the evolution of the whole system.

2.2. Building Energy Service Industry

Building energy service projects involve many services, including consultancy, design, equipment, construction, operation, finance, and others, making the BESI complex. Compared with energy services in other fields (e.g., industrial services), the development of the BESI lagged [3] due to numerous reasons, such as lacking sufficient support in current policies, the availability of few industry professionals, uncertainty about audit activities regarding energy saving, the complexity of energy retrofitting in old buildings, and lower payback [26,27,28]. Regarding the above circumstances, some studies have focused on depicting the risk indicators and critical success factors and proposing a series of policy recommendations accordingly [29,30]. Sorrell [31] reported on the marked effect of transaction costs in the BESI and revealed that reducing transaction costs is of great importance for expanding the industrial market. Previous studies have also claimed that other factors regarding energy-saving measurements, financial institutions, and credit systems exert influence on the BESI [3,15,32]. However, previous works have primarily been rooted in specific dimensions, and few consider the issues from a holistic view of the BESI system. The limitations of former research have been realized recently; thus, the BESI system continues to provoke increasing academic attention. Patlitzianas et al. [33] developed a decision-making system from multiple dimensions considering several indicators. It was utilized in 13 European Union countries. Wu [32] probed the BESI system from the perspective of three different mechanisms: enforcement, incentive, and moral. These studies viewed the BESI system as a whole but failed to reveal the dynamic change in the system’s development and insights into the system’s operation. Therefore, it is necessary to consider the dynamic mechanism of the BESI and thereby promote its sustainable development.

3. Research Methodology

Given that this paper primarily determines the driving force of the BESI and the analysis of the industry’s evolutionary phases, it is necessary to set this analysis within the context of the wider research methodology informing the study (Figure 1).

Phase 1 focuses on the BESI system’s establishment, dividing it into several sub-systems. According to synergetic theory, it is the order parameter guiding the evolution of the BESI. Phase 2 attempts to identify the order parameter based on the literature review and determine the main order parameters. Phase 3 analyzes the BESI’s evolution based on the results gained in phase 2.

The central part of this paper is Phase 2, which concentrates on the order parameters’ selection and the point-scoring phase within the context of earlier work that discussed models’ development and weighting. The simplified logical sequence of the empirical study is shown in Figure 2. First, the BESI system—consisting of several sub-systems—is structured, and the order parameters in the BESI system are identified. Then, the order parameter in the whole system is evaluated utilizing the Decision-Making Trial and Evaluation Laboratory (DEMATEL) method. The DEMATEL is primarily used for assessing the cause-and-effect relationship between the problem criteria by producing a digraph and a cause-and-effect diagram that shows the influence of each factor on another [33,34]. Clustering analysis was also conducted to categorize the determined order parameters. Based on the analysis and findings, several suggestions will be proposed to boost the development of the BESI.

To obtain the required data and verify the results, a three-stage data collection approach is applied in this research. Firstly, based on the BESI system established according to the synergetic theory, the literature regarding energy services was thoroughly reviewed to preliminarily identify order parameters.

Secondly, the first round of semi-structured interviews was implemented. It aimed to verify the preliminarily identified order parameters in the BESI system and gain an in-depth understanding of the BESI in the Chinese context. The interviewees were selected based on the following principle: they had either rich practical or academic experience in the BESI field. Academics were shortlisted based on their publication profiles in the energy service, building energy service, and energy conservation fields; their reputations at national and international levels; and their research statuses, whilst the professionals represented a diverse mix of policy-makers/legislators, ESCOs, and end-users. To obtain representative data from across these sectors, the panels needed to be robust in terms of both the number and quality of the personnel. A total of 15 interviewees were selected. These interviewees included professors, lecturers, managers, Ph.D. candidates, employees, and so forth. During the interview, the interviewees were asked to: (1) check the preliminary list of order parameters in the BESI system; (2) introduce the history, status quo, and their perceived future development of the BESI in the Chinese context; and (3) answer a series of open-ended questions regarding the BESI.

The third stage of data collection was to gain the required information for performing the DEMATEL approach. According to Asadabadi, Chang, and Saberi [35], engaging group meetings can abate personal bias to the greatest extent. To circumvent the flaws of questionnaire surveys, a focus group was formed to obtain DEMATEL data. The members of the group meeting were also selected based on the above-mentioned principle. During the group meeting, the connotations of each order parameter were clearly illustrated to ensure 10 participants could hold a similar understanding of the parameters. Then, the participants were required to jointly answer the following queries: (1) can one parameter exert a direct influence on another parameter, and (2) what is the degree of this influence? All pairs of parameters were clearly examined.

Finally, after the data were processed, the second round of interviews was undertaken to verify the result of the DEMATEL approach. This verification is of great necessity since the quantitative result is based on the processing of the scores in the group meetings, which still involve subjective opinions despite excluding personal bias to a certain extent. To guarantee the quality of the results, eight interviewees were included in the second-round interview based on the above-mentioned interviewee selection principles. The details of the interviewees and group meeting members are shown in

Table 1. Information of the experts.

No.	Affiliation	Position	Participation
1	Southeast University	Professor	I-1
2	The Hong Kong Polytechnic University	Associate professor	I-1, I-2
3	Southeast University	Postdoctoral fellow	I-1
4	Chongqing University	Lecturer	I-1, GM
5	Chongqing University	Professor	I-1, GM
6	EMCA	Researcher	I-1, GM
7	EMCA	Researcher	I-1, GM
8	Lingxiang Environmental Protection Co., Ltd.	Chief executive	GM
9	China Everbright Bank	Manager	I-1, GM
10	Jialida Co., Ltd.	Manager	I-1, GM
11	Zhongjiang Energy Co., Ltd.	Manager	GM
12	The Hong Kong Polytechnic University	Researcher	I-1
13	Datang Energy Saving Technology Co., Ltd.	Technician	GM
14	Southeast University	Associate professor	I-1
15	Aijing Energy Saving Technology Co., Ltd.	Manager	I-1, GM
16	EMCA	Researcher	I-2
17	The Hong Kong Polytechnic University	Professor	I-2
18	Huadian Energy Co., Ltd.	Manager	I-1, I-2
19	Daneng Energy Saving Technology Co., Ltd.	Technician	I-1, I-2
20	Zhiguang Energy Saving Co., Ltd.	Technician	I-2
21	Zhengmao Energy Saving Co., Ltd.	Technician	I-1, I-2
22	Shengyuan New Energy Co., Ltd.	Manager	I-2

Note: I-1 = First Round Interview; GM = Group Meeting; I-2 = Second Round Interview.

.

4. Order Parameter of BESI System

4.1. Synergetics in BESI

As mentioned above, synergetics is adopted in dealing with self-organizing systems composed of many subsystems. In addition, the systems should have the following necessary conditions: (1) openness; (2) non-equilibrium state; (3) non-linear; (4) mutation; (5) fluctuations; and (6) positive feedback. The BESI system is a complex system including several subsystems, which can be regarded as a self-organizing system in which matter, energy, and information are exchanged with the external environment. Figure 3 conceptually describes the BESI system. The basic unit of the BESI system is the energy service company (ESCO) and other stakeholders, including the government departments, clients, media, equipment suppliers, finance agencies, and third-party certification authorities [29]. The ellipse in Figure 3 represents the boundary of the BESI system, and internal forces, which are caused by the interacted internal entities, are shown as the dotted arrows inside the ellipse. In contrast, external forces, which are caused by the system environment, are represented by solid arrows.

The external environment of the BESI system is complex. According to the Porter Diamond Model and the contents described in previous research, the development of an industry can be regarded as the interaction between governmental factors, demand conditions, related and supporting industries, the factors’ conditions, and chance [29,36]. Thus, we can divide the BESI system into four subsystems, as shown in Figure 4: the core operation subsystem, the production factor subsystem, the industry-standard subsystem, and the external environment subsystem. The core of the whole system is “the core operation subsystem”, which aims to provide building energy services. The remaining three are intended to provide the appropriate resources for the core operating subsystem. The four subsystems are interrelated, exchanging material, energy, and information with the outside world, and they jointly promote the development of the building energy efficiency services industry.

The evolution of the BESI system is the result of the interconnection and superimposition process of these subsystems. The evolution process is illustrated in Figure 5. Following the period of system generation, the industry system will develop in chaos and order alternatively. The building energy industry system in China was initially in chaos and remains so to this day, but with progress, this may turn into order. Once it reaches a critical point, it will develop in greater order or in chaos, leading to the degradation of the system. Based on the synergetic theory, during this period, it is the order parameter determining the destination of the building energy service industry system.

The BESI system develops through evolution—governed by order parameters—from disorder to order and from a lower evolution mode to an advanced one. Initially, the internal elements of subsystems adapt to the changes in the external environment, moving towards the complex and advanced stages of development. Then, the co-evolution of the internal subsystems occurs under the interaction of the subsystems. After a subsystem has evolved to an advanced stage, the related subsystems will evolve. A synergistic evolution exists between the BESI system and its external environment. The system impacts the environment; meanwhile, the system continues to change and adapt to the changes in the environment. The subsystems of the BESI exchange matter, technology, capital, and information through the following pathways: (1) among the system’s elements; (2) between elements and subsystems; (3) among subsystems; and (4) between the system and the environment. These exchanges can result in competition and cooperation among the subsystems. Competition leads to imbalances in the development of each subsystem. The generated imbalance will, in turn, generate greater imbalances and differences in the system, promoting the system’s evolution. Cooperation denotes the coordination and collaboration of subsystems which will dominate the overall evolution of the system. The orderly evolution of a system is mainly contributed by cooperation. Without cooperation in a system, it will eventually enter a disordered status. In addition, an orderly structure will allow the BESI system to better adapt to external changes. The synergies in the evolution of the BESI system can be summarized as intra-subsystem synergy, inter-subsystem synergy, and subsystem–environment synergy.

4.1.1. Intra-Subsystem Synergy

There are two kinds of synergies within the BESI subsystem: the synergy of subjects in subsystems and the synergy between subjects in subsystems.

(1)

Synergy of subjects

Here, subjects in the subsystems denote the stakeholders involved in the BESI system, including ESCO, owners, material equipment suppliers, third-party consulting or evaluation agencies, and other related subsystems [19,37]. The synergy of subjects is within the scope of a subject. Usually, there are two kinds of synergies in a subject: synergy within a department and synergy between different departments. In the core operating subsystem of the BESI system, only two subjects are involved, namely, the ESCO and the owners. The synergy of the ESCO means the cooperation and competition of the ESCOs, that is, the cooperation between departments of planning, investment, procurement, operations, technology, and others, with the goal of promoting the BESI’s development.

(2)

Synergy between subjects

The synergy between subjects refers to the interaction between different subjects in the BESI system. There are several subjects involved in the BESI system, each of which plays a different role and has a varying impact on the whole system. The evolution of the dominant subject will affect the other subjects and the synergy of the system. Therefore, it is necessary to emphasize ESCOs, which are recognized as the dominant subject, to drive the evolution of other subjects and, eventually, the BESI system.

4.1.2. Synergy between Subsystems

Synergies between subsystems are the co-evolution of mutual benefit symbiosis between subsystems by means of cooperation and interaction. This can be expressed as an interdependent and mutually beneficial relationship between subsystems. As mentioned above, the dominant subject can guide the whole system. The synergy between subsystems we discussed here mainly refers to the synergy between the core operating system and other subsystems.

(1)

Offering of building energy service

The core operating system offers the building energy service cooperation and interaction between ESCOs, owners, and other stakeholders. Other subsystems interact with the core operating system by means of cooperation. The production factor subsystem provides resources such as talent, technology, material, and equipment for the core operation subsystem. The core operating sub-system acts as the demander in the whole system, providing market-oriented resources, such as customers, for the production factor subsystem. The synergy between these two subsystems can enhance production efficiency and reduce costs, which is beneficial to both parties. This type of synergy can be regarded as a mutually beneficial synergy.

(2)

Operation of BESI system

A supportive relationship exists between the core operating and industry-standard subsystems. The industry standard subsystem guarantees the building energy service with the assistance of codes of practice, contract regulations, and other specifications and guidelines. These industry standards are crucial for the stable and healthy development of the BESI, as they protect the interests of the involved stakeholders. The practical experience of stakeholders can, in turn, provide a basis for the industry standard. This interrelationship can also be treated as a mutually beneficial synergy for a collaborative evolution.

(3)

Driving forces of BESI system

The core operation subsystem cannot develop without being driven by an external environment. On the other hand, the external environment gradually becomes complete because of the involvement of the core operating subsystem, thereby promoting other industrial development. For the BESI system, this mutually beneficial form of cooperation is an important pathway towards the development of subsystems.

Cooperation between different sub-systems can include joint research and development with respect to dealing with technical problems, the sharing of advanced technology, channels of funding support, and the mutual exploitation of resources to compensate deficiencies. Such cooperation can promote the sharing of resources, thereby expanding the BESI. Based on the abovementioned cooperation between subsystems, the synergy formed can maximize the utilization efficiency of resources.

4.1.3. Synergy between the System and the External Environment

The synergy theory holds the opinion that there is mutual synergy between a system and the external environment in which the system exchanges its resources. The synergy between the BESI system and the external environment has two aspects. One is the adaption to the external environment; the other is the influence on the external environment.

(1)

Adaption to the external environment

The BESI system is exposed to and affected by the external environment, e.g., the laws, regulations, policies, government administration, market, economic status, labor force, industrial structure, technology, and others. The external environment will positively and negatively impact the BESI system. Positive influence means providing the opportunity for industrial systems’ development. The negative influence will threaten the development of the BESI system and hinder its orderly development. Synergy between the system and the external environment requires a complete understanding of the external environment. Based on this understanding, opportunities can be grasped while threats can be avoided.

(2)

Impact on the external environment

The development of the BESI, like any other industry system, will inevitably affect its external environment. A system that can positively influence or even change the environment should be coordinated and orderly. The development of the BESI system will have an aggregational effect in one area, thus promoting the development of other related industry systems. At the same time, the external environment consisting of research, education, technology, and others can be improved. The competition among stakeholders in the BESI system will accelerate the process of energy conservation-related technological innovation. The synergetic development of the BESI system will positively influence the external environment and effectively promote the development of science, education, the economy, society, and the political environment.

4.2. Identification of Order Parameters

The order parameters control the development of each subsystem, and the whole system evolves through the interactions between subsystems. To determine the order parameters in the BESI system, professional journals, conference papers, books, government publications, internet resources, etc., were reviewed. Based on verification from the interviews, factors with similar meanings were integrated into one factor; for example, “government subsidies”, “financial policy”, “reduction of interest”, and “free tax” were merged into the factor of “financial incentive policy”. In total, 17 order parameters in the abovementioned subsystems were selected (see Figure 6). The core operation subsystem includes eight parameters measuring the capability of risk management, project management, the raising of funds, and energy auditing. The production factor subsystem covers three parameters related to professionals, financing, and technology. There are six parameters in the industry environment subsystem, focusing on the industry payback, labor, and industry standards. The specific meanings of each parameter are shown in

Table 2. Meaning of order parameters in BESI system.

Code	Meaning	References
P1	Estimation and control of risk	[29]
P2	Management of building energy service procedures	[29,38]
P3	The rasising of funds from banks and social capital	[18,39,40]
P4	Audit of the amount of energy savings before and after the project’s implementation	[18,37,39]
P5	Interests and responsibility among stakeholders	[17,37,40]
P6	Allocatation of reasonable tasks and risk to involved stakeholders	[18,37,38]
P7	Timely and efficient communication among stakeholders	[18,41]
P8	Proportion of companies above designated size	[41]
P9	Sufficient number of professionally trained staff	[39]
P10	Financial support from all financial channels	[39,41]
P11	Effort towards technological innovation	[37,39,41]
P12	Payback of the project	[38]
P13	The ratio of actual output and maximum output	[42]
P14	The level of income compared to other industries	[43]
P15	Credit system constraining corporate behavior	[18,37,39,43]
P16	Official system for measuring energy savings	[44]
P17	Standard contract used as a template for companies	[44]

.

5. Empirical Results

Several steps exist for performing the DEMATEL-cluster method [33,45].

Step 1: Generate the initial direct relation matrix A. In this research, the weighted average method was adopted to record the influence degree. The effect of factor i on factor j is denoted as aij. If factor i does not directly influence factor j, then the corresponding score in the matrix is recorded as 0. Similarly, 1, 2, and 3 represent weak influence, moderate influence, and strong influence, respectively. Then, the direct relation matrix can be expressed in

Table 3. Overall direct relation matrix.

	P1	P2	P3	P4	P5	P6	P7	P8	P9	P10	P11	P12	P13	P14	P15	P16	P17
P1	0	3	3	1	1	3	0	0	0	0	0	0	2	0	0	0	0
P2	1	0	2	0	2	2	0	0	0	0	0	2	2	0	0	0	0
P3	0	2	0	0	1	1	0	0	0	1	0	0	0	1	0	0	0
P4	1	0	0	0	1	1	0	0	0	0	0	0	0	0	0	0	0
P5	0	0	2	0	0	3	3	0	0	2	0	1	1	0	2	0	1
P6	1	1	0	0	2	0	2	0	0	1	0	1	1	0	2	0	1
P7	2	2	2	1	3	3	0	0	1	1	0	1	2	0	2	0	1
P8	0	0	1	0	1	2	0	0	2	3	2	0	0	0	2	0	0
P9	3	3	2	2	1	2	1	0	0	1	2	1	2	1	0	0	0
P10	0	0	3	0	1	2	0	0	0	0	0	0	0	1	0	0	0
P11	1	2	0	0	1	1	0	0	1	1	0	1	3	0	0	0	0
P12	0	0	1	0	0	0	0	0	1	0	0	0	1	2	0	0	0
P13	0	2	1	0	0	0	0	0	1	1	0	1	0	1	0	0	0
P14	1	1	0	1	0	0	0	0	2	0	1	1	1	0	0	0	0
P15	3	1	2	0	3	3	3	1	0	3	1	2	2	0	0	0	2
P16	2	1	2	2	1	2	2	0	0	3	0	0	1	0	1	0	2
P17	2	0	1	1	2	2	3	1	0	2	1	1	2	0	2	3	0

:

Step 2: Normalize the overall direct relation matrix B using Equation (1).

$$\mathrm{B}=\frac{A}{max{{\displaystyle \sum }}_{j=1}^n{a}_{ij}},\mathrm{where}0\le \mathrm{a}\le \mathrm{n}$$

(1)

Step 3: Develop the total relation matrix, using Equation (2).

$$\mathrm{C}=\mathrm{B}{\left(\mathrm{I}-\mathrm{B}\right)}^{-1}$$

(2)

I = identity matrix.

Step 4: Compute the prominence (D + E) and net cause/effect (D − E) values for each barrier using Equations (3) and (4)

$$\mathrm{D}=\left[\begin{array}{c}{\displaystyle \sum }_{J=1}^n{C}_{ij}\end{array}\right]$$

(3)

$$\mathrm{E}=\left[\begin{array}{c}{\displaystyle \sum }_{i=1}^n{C}_{ij}\end{array}\right]$$

(4)

$${\omega }^{\prime }=\sqrt{\left[(D_i+R_{i)}{}^2+{\left(D_i-R_i\right)}^2\right]}$$

(5)

$${\omega }_i={\omega }_i^{\prime }/{{\displaystyle \sum }}_{i=1}^n{\omega }_i$$

(6)

Step 5: Derive the inner dependence matrix by eliminating the entries less than the threshold value (α) in the total relation matrix. The threshold value is equal to the average of all entries in the total relation matrix, as given by Equation (7).

$$\mathsf{\alpha }=\frac{{{\displaystyle \sum }}_{j=1}^n{{\displaystyle \sum }}_{i=1}^n{c}_{ij}}{{\mathrm{n}}^2}=0.11$$

(7)

Step 6: Depict the structural relationship between factors by constructing a prominence–causal relationship diagram (see Figure 2).

Step 7: Calculate the weight of each order parameter.

All the results can be found in

Table 4. Total relation matrix.

	P1	P2	P3	P4	P5	P6	P7	P8	P9	P10	P11	P12	P13	P14	P15	P16	P17
P1	0.02	0.15	0.15	0.04	0.08	0.15	0.02	0	0.01	0.03	0	0.03	0.11	0.01	0.02	0	0.01
P2	0.05	0.03	0.11	0	0.1	0.11	0.02	0	0.01	0.02	0	0.1	0.1	0.02	0.02	0	0.01
P3	0.01	0.09	0.02	0	0.06	0.06	0.01	0	0.01	0.05	0	0.02	0.02	0.04	0.01	0	0.01
P4	0.04	0.01	0.01	0	0.05	0.05	0.01	0	0	0.01	0	0.01	0.01	0	0.01	0	0.01
P5	0.04	0.05	0.14	0.01	0.07	0.19	0.16	0.01	0.01	0.12	0.01	0.07	0.09	0.02	0.11	0.01	0.06
P6	0.07	0.08	0.06	0.01	0.13	0.07	0.12	0.01	0.01	0.08	0.01	0.07	0.09	0.01	0.11	0.01	0.06
P7	0.12	0.14	0.16	0.05	0.19	0.21	0.06	0.01	0.05	0.1	0.01	0.09	0.14	0.02	0.12	0.01	0.07
P8	0.04	0.04	0.09	0.01	0.09	0.14	0.04	0	0.09	0.15	0.09	0.03	0.05	0.02	0.1	0	0.02
P9	0.15	0.18	0.14	0.09	0.1	0.15	0.07	0	0.02	0.07	0.08	0.08	0.14	0.06	0.03	0	0.01
P10	0.01	0.02	0.13	0	0.06	0.1	0.02	0	0.01	0.02	0	0.01	0.01	0.05	0.01	0	0.01
P11	0.06	0.11	0.04	0.01	0.07	0.08	0.02	0	0.05	0.06	0.01	0.06	0.14	0.02	0.01	0	0.01
P12	0.01	0.02	0.05	0.01	0.01	0.01	0	0	0.05	0.01	0.01	0.01	0.05	0.08	0	0	0
P13	0.01	0.09	0.06	0.01	0.02	0.02	0.01	0	0.05	0.05	0.01	0.05	0.02	0.05	0	0	0
P14	0.06	0.07	0.03	0.05	0.02	0.03	0.01	0	0.08	0.01	0.05	0.05	0.07	0.01	0	0	0
P15	0.17	0.12	0.18	0.02	0.2	0.23	0.18	0.04	0.03	0.18	0.05	0.13	0.16	0.03	0.06	0.01	0.11
P16	0.12	0.09	0.15	0.09	0.11	0.17	0.12	0.01	0.01	0.16	0.01	0.04	0.09	0.02	0.08	0.01	0.1
P17	0.14	0.08	0.14	0.06	0.16	0.19	0.18	0.04	0.02	0.15	0.05	0.09	0.15	0.02	0.13	0.12	0.04

,

Table 5. Degree of prominence and net cause/effect values.

	D	E	D + E	D − E	Weight
P1	0.83	1.12	1.95	−0.29	0.06
P2	0.71	1.36	2.07	−0.65	0.06
P3	0.41	1.66	2.06	−1.25	0.07
P4	0.23	0.48	0.71	−0.25	0.02
P5	0.44	1.42	1.86	−0.98	0.06
P6	0.54	0.49	1.03	0.05	0.03
P7	1.18	1.50	2.68	−0.32	0.08
P8	0.99	1.96	2.95	−0.97	0.09
P9	1.55	1.05	2.60	0.50	0.08
P10	1.00	0.13	1.13	0.87	0.04
P11	1.36	0.50	1.86	0.86	0.06
P12	0.46	1.29	1.74	−0.83	0.06
P13	0.73	0.39	1.11	0.34	0.03
P14	0.32	0.93	1.25	−0.61	0.04
P15	1.90	0.83	2.72	1.07	0.09
P16	1.39	0.18	1.57	1.22	0.06
P17	1.77	0.52	2.29	1.25	0.08

and

Table 6. Inner dependency matrix.

	P1	P2	P3	P4	P5	P6	P7	P8	P9	P10	P11	P12	P13	P14	P15	P16	P17
P1		0.15	0.15						0.11			0.15
P2			0.11									0.11
P3
P4
P5	0.15	0.18	0.14						0.14			0.15
P6			0.13
P7		0.11							0.14
P8
P9
P10
P11			0.14			0.12						0.19	0.16		0.11
P12											0.13		0.12		0.11
P13	0.12	0.14	0.16						0.14		0.19	0.21			0.12
P14						0.15						0.14
P15	0.17		0.18			0.18		0.13	0.16			0.23	0.18				0.11
P16	0.12		0.15			0.16					0.11	0.17	0.12
P17	0.14		0.14			0.15			0.15		0.16	0.19	0.18		0.13	0.12

.

According to the results presented in Table 5, the DEMATEL prominence–causal relationship of all the order parameters could be drawn and is shown in Figure 7, which provides a convenient representation of the factors. The upper half of the diagram comprises causal factors, and the lower half comprises effect factors. The arrows show the interrelationship between the order parameters of the BESI. The solid line represents a bi-directional relationship, while the dotted line represents a one-directional relationship. In addition, by calculating the mean of the (R + C) values, four quadrants are created. P17, P15, P11, and P9 in the upper right quadrant are considered core factors because of their high prominence and relationship. These factors are of utmost importance for the BESI. P16, P10, P13, and P6 in the upper left quadrant are recognized as driving factors because of their low prominence but high relation to the factors. This group of factors should receive further attention once the previous groups of factors are considered. According to the relationship indicated by the arrows in Figure 7, P9 (quality and quantity of industry professionals), P15 (credit system), P16 (energy-saving certification system), and P17 (standard contract) influence the other order parameters the most; thus, they were considered as the major foundational cause elements. P1 (capability of risk control and management), P8 (industrial structure), and P3 (capability of raising funds) are recognized as the major foundational effect elements.

However, the DEMATEL diagram only shows the prominence–causal relationship between the order parameters. According to the synergetic theory, the main order parameters are the leading forces in an industry, and the industry is the integration of the order parameters. To determine the main order parameters, a cluster analysis was conducted to divide the order parameters into several parts (see Figure 8).

It is shown that the order parameters can be divided into three types: (P1: capability of risk control and management, P16: energy-saving certification system, P12: return on investment, P5: interrelationship between stakeholders, P11: technical level and technological innovation in building energy efficiency, and P2: capability of project implementation), (P8: industrial structure, P15: credit system, P9: quality and quantity of industry professionals, P17: application of standard contract, P7: effective communication, and P3: capability of raising funds), and (P10: accessibility of financial support, P14: labor income level, P6: arrangement of tasks and risk, P13: production efficiency, and P4: capability of building energy auditing). The three types can be summarized as technological innovation, industry standards, and financial support. According to the synergetic theory, these three factors are the main order parameters that guide the development of subsystems in the BESI and lead the industry to order.

(1)

Technological innovation

The core competitiveness of the building ESCOs is an irreplaceable factor because the ESCOs only save a larger amount of energy to generate income if their technology is sufficiently advanced. With more widely promoted energy conservation products and technology, ESCOs will profit more due to the larger degree of energy abatement, leading to more ESCOs involved in the BESI. Technological innovation can fully release the vitality of innovation elements such as “talent, capital, information, and technology” and achieve the aim of breaking barriers between stakeholders involved in building energy service projects. In detail, scientific research institutions, universities, materials and equipment suppliers, and ESCOs need to share resources, information, and production technology with each other to improve the technology level of the industry. As a result, in the core operation subsystem, it is advisable to improve the capability of ESCOs, while in the production factors subsystem, learning advanced technology and investing more in technological innovation is essential. In addition, technological innovation can improve production efficiency in the industry environment subsystem.

(2)

Industry standard

As for industry standards, this factor is critical for the BESI system because the industry standard can set rules for raising funds, stakeholders’ relationships, and anything concerning business activities in the industry. In the BESI, industry standards include energy conservation certification standards, technical standards, and so on. Industry standards are normative documents mainly launched by the government and industry associations with the aim of regulating the industry and guiding its development. Industry standards should constrain many aspects of building energy service projects. For instance, if the energy-saving amount is determined and unification to determine the energy-saving amount is achieved, then the interests of the stakeholders involved in the project can be safeguarded.

(3)

Financial support

Finally, since building energy service projects necessitate a long development cycle and generate weak short-term profitability, building ESCOs can only run with financial support. Thus, more financial channels should be open to the ESCOs, and more funds are needed to promote the development of the BESI. The core operation subsystem mainly uses contract energy management as the operating mechanism of the market. Essentially, it needs ESCOs to receive financial support to conduct projects. The energy-saving profit obtained is distributed among the ESCOs and the owners through a certain profit distribution mechanism. In addition, all technological research, efforts to establish corresponding policies, and reference standards developed by industry associations require substantial financial support. In addition, financial support mainly stems from financial or credit institutions, governmental industrial development funds, and the enterprise’s funds or investors.

6. Discussions and Policy Implications

Haken revealed the relationship between the order parameters in synergetics [46,47]. During a period of time, a specific order parameter dominates the other order parameters and elements within the system [31]. After ordering these parameters/elements’ actions, the order parameter loses its dominant position, transferring it to another order parameter, thereby generating a cyclical phenomenon. Based on the results obtained in this research, in the BESI system, there exist three main order parameters, namely, “technical innovation”, “industry standard”, and “financial support”. As suggested by the synergetic theory, the order parameters will control or enslave the system or subsystems and dominate the cyclical process of the entire BESI system. Notably, with respect to the overall BESI in China, the synergetic theory could explain its evolution. The determined three-order parameters take the dominant role in controlling the development of the BESI system under the competitiveness and synergetic interactions among them.

6.1. Explaining the Developmental History of BESI

In the initial stage of an industry, regulations and economic incentives are always utilized to promote industrial development [48]. Since being introduced into China in 1998, several schemes have been launched to demonstrate and promote the EPC mode, including establishing various types of new energy service companies, testing the feasibility of Energy Performance Contracts (EPC) in China, and forming China’s energy service industries [16,39]. Moreover, it can attract financial support from all types of investors and promote the development of the energy service industry. In the first phase of the project, three demonstrative energy service companies (ESCOs) were set up. Since then, the BESI has witnessed rapid growth, with three turning points in 2006, 2010, and 2014 (Figure 9).

As revealed by historical developments, financial support, defined as the main order parameter, is the main impetus of the BESI industry in the beginning stage. From 2003, a great deal of financial support was provided by the central government, banks, and NGOs [39]. In addition, during the seven years of the project’s implementation, the project saved 35.33 million tons of standard coal, reducing CO2 emissions by 23.42 million tons. At the end of the second phase of the project, a sustainable ESCO industry is expected to be formed in China. In addition, the Energy Management Companies Association (EMCA) was established in 2003 under the supervision of the China Energy Conservation Association. Since then, the EMCA has played a critical role in promoting ESCOs in China through the setting of industry standards, knowledge sharing, research, and capability building. In 2006, the China Utility-Based Energy Efficiency Finance Program (CHUEE) was implemented under the leadership of the Chinese government, with support from the GEF, Finland, and Norway. Since 2006, CHUEE has enabled key players in China’s economy—banks, utility companies, government agencies, and suppliers of energy efficiency equipment and services—to collaborate, for the first time, in creating a sustainable financing model. These two grant programs have provided enough funding for the development of the BESI. Companies are profit-oriented, so financing support is always an attraction for them to enter into the industry. However, as more players participate in the market, more support should be provided aside from solely financial support.

With the size of the BESI market increasing, the industry standards gradually played the main role in regulating the market and encouraging the implementation of EPC, e.g., the Notice of the State Council on Resource Conservation Activities, the Notice of the State Council on the Recent Focus on the Construction of a Conservation-Oriented Society, the 11th Five-Year Plan, the Comprehensive Energy Conservation Program of Work Notice Embodiments, and others.

In 2010, the General Office of the State Council forwarded the “Notice on Accelerating the Implementation of Energy Performance Contracting and Promoting the Development of the Energy Service Industry”, jointly issued by the National Development and Reform Commission, the Ministry of Finance, the State Administration of Taxation, and the People’s Bank of China. This notice is a milestone in the BESI, providing guidelines on subsidies, tax, accounting, and financial products for the BESI. Following this notice, a series of policies were launched to foster the development of the BESI, mainly including financial support and industry standards, such as Contract energy management Projects Financial Incentives, Fund Management Interim Measures, and Energy Development of the 12th Five-Year Plan.

6.2. Directing Future Trend of BESI

Financial support and industry standards have been driving the BESI for the last few decades, which has been verified by the research findings. Industry standards can provide a normative environment and regulate market behaviors, while financial support can attract more companies to enter into the market [49]. These two parameters help to shape a mature market environment for the BESI. However, development will enter a bottleneck period as industry mutuality increases.

The results indicate that technological innovation is one of the main order parameters. This may imply that technological innovation will guide the development of the BESI in the coming years [50,51]. Other research also echoed this assumption, demonstrating that technology is the core and everlasting driving force for industry [52]. The IEA-EMCA survey shows that the BESI industry requires more advanced technology and digitalization. The IEA’s Energy Efficiency 2019 market report has elaborated on how digitalization can provide opportunities to accelerate and modernize energy efficiency in this critical time of a global clean energy transition. In the next evolutionary stage, technological innovation must play a dominant role in leading the trend of the BESI.

6.3. Policy Suggestions for the BESI

According to the above analysis, the development of the BESI can be divided into four stages, each dominated by different order parameters: the formation stage, the financial-support-oriented stage, the industry-standard-oriented stage, and the technology-innovation-oriented stage. To enter into the technology-innovation-oriented stage, the current policies should be enhanced, and new instruments can be introduced [53]. Recently, a series of national action plans, including Made in China 2025, Guidance on the Promotion of the Internet of Things, and the Three-Year Action Plan to Promote the Development of a New Generation of Artificial Intelligence (AI) Industry 2018–2020 contributed to addressing the State Council’s ambition to make ‘new-generation information technology’ a strategic industry [54]. Technological innovation has been raised to an important position, thereby necessitating greater policy support [55]. As indicated by the aforementioned interpretation of synergism in the BESI, several aspects need to be strengthened in terms of technological innovation, including the capability of risk control and management, energy-saving certification systems, return on investment, and the capability of project implementation. Since the payback of an ESCO is largely determined by the amount of energy savings, technology and verification are of great significance [17]. Governments should regulate the energy savings verification system and create guidelines for different industry segments [56]. With the increasing attention to digitalization, the BESI should transform in accordance with the digital era. However, a lack of clear guidance and legal protection around data use, security, and privacy could discourage innovative applications and hinder ESCOs seeking to embrace smart digital technologies. It is essential for the government to set laws or industry regulations to protect data security and privacy. In addition, it is advisable for industrial associations to create an industrial platform for information sharing and industrial data analysis [57].

Despite technological innovation, financial support and industry standards should also be emphasized. As revealed by the results, the industry structure, credit system, industry professionals, standard contracts, funding channels, the labor income level, and energy auditing are the key determinants. Other research has also demonstrated that there is distrust between stakeholders [17,18,19]. Thus, an industrial credit system should be structured to guarantee the successful implementation of ESCO projects. The standard contract has been generally systematized for all industries. A specific version for the building sector is needed since the energy consumption patterns are totally different between the building and industrial sectors [58]. Green financial instruments will be promoted instead of government subsidies with respect to funding channels [59]. China committed to lowering peak carbon emissions by 2030 and reaching carbon neutrality by 2060. All levels of government are devoted to this target. New modes can be developed by combing the EPC mode with carbon trading. Funding for reducing carbon emissions can also be accessed by ESCOs.

7. Conclusions

To achieve climate goals and energy conservation targets, it is crucial to develop the BESI since the building sector accounts for the highest degree of energy consumption and the largest source of carbon emissions. This research aims to reveal the evolutionary mechanism, conditions, and principles of the BESI system, while also exploring the main forces driving the development of the BESI. This paper adopted the synergetic theory and views BESI as a system moving forward under the interconnection of subsystems. Three subsystems were identified and analyzed based on establishing the BESI system. According to the literature review, 17 order parameters that affect the development of the BESI were selected, and three main order parameters were finally determined by the DEMATEL method.

The research demonstrated that the evolution of the BESI system results from the interconnection and superimposition process of four subsystems, including the corporate operation subsystem, industry-standard subsystem, production factors subsystem, and external environmental subsystem. The synergy of the BESI has been illustrated by adopting the synergetic theory, consisting of synergy in subsystems, synergy between subsystems, and synergy between the system and the external environment. The results also show that there are three main order parameters dominating the evolution of the BESI system, including “financial support”, “industry standard”, and “technology innovation”. The historical development of the BESI was proven to be driven by the determined order parameters, financial support and industry standard, and it was determined that the future trend could be guided by technological innovation. Several policy suggestions regarding the three order parameters were made according to the research findings with respect to, e.g., the capability of risk control and management, the establishment of an energy-saving certification system, return on investment, the capability of project implementation, industry structure, credit system, industry professionals, standard contracts, funding channels, labor income level, and energy auditing.

A comprehensive and in-depth understanding of the BESI system can enable the more efficient and effective development of the BESI. Apart from the BESI itself, the synergy between the BESI and the external environment can be further explored to provide a suitable external environment for the development of the BESI. Furthermore, as indicated by this research, the BESI is driven by technological innovation, and the path for adopting emerging technologies in the BESI can also be discussed. This research has proven that synergetic theory can be used to analyze the BESI system. Thus, this theory can be extended to other types of energy service systems.