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Cost of capital of energy efficiency projects: The case of space heating and cooling
Periodica Polytechnica Social and Management Sciences
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| Title |
Cost of capital of energy efficiency projects: The case of space heating and cooling
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| Creator |
Dülk, Marcell
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| Subject |
cost of capital; energy efficiency; beta; project; capital budgeting
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| Description |
In this paper, we develop and test the hypothesis of zero betas for energy efficiency projects related to space heating and cooling. We focus only on projects using electricity or natural gas and reason that none of their key risk factors has correlations significantly different from zero with the market portfolio or one another, whether the investor is a household or business entity. Supporting evidence from a number of European countries is presented. Our findings suggest that, in the Capital Asset Pricing Model (CAPM) framework, the cost of capital is the risk-free rate. It is argued that this discount rate needs no adjustment for country risk and is likely to be valid for other countries as well as other types of energy efficiency projects using natural gas or electricity.
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| Publisher |
Budapest University of Technology and Economics
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| Date |
2012-01-01
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| Type |
info:eu-repo/semantics/article
Peer-reviewed Article info:eu-repo/semantics/publishedVersion |
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| Format |
application/pdf
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| Identifier |
http://www.periodicapolytechnica.org/so/article/view/1563
10.3311/pp.so.2012-1.01 |
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| Source |
Periodica Polytechnica Social and Management Sciences; Vol. 20, No. 1 (2012); 3-10
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| Language |
eng
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| Relation |
http://www.periodicapolytechnica.org/so/article/view/1563/881
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| Rights |
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access). As soon as the paper is accepted, finally submitted and edited, the npaper will appear in the "OnlineFirst" page of the journal, thus from this point no other internet-based publication is necessary
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