Effect of Energy Conservation Technology on Value of Real Estate

<p>In recent years, the green movement has been sweeping across our society. Some studies provide evidence on the economic value of certifying “green buildings”. It is difficult to evaluate the economic value of energy-savings investments without risk quantification. An effective method for risk quantification is the Monte Carlo method. This method obtains the distribution of an unknown probabilistic entity through repeated random sampling. In this paper, various probabilistic models that were developed in the 2nd paper to the 4th paper of this research are introduced to the building energy calculation model, and the effect of energy saving investment is probabilistically evaluated by using the Monte Carlo method. The external weather conditions, occupant behavior, tenant attributes, probabilistic models relating to tenant entry and exit and building facility energy simulation models are integrated. The simulation is performed (20 years × 1,000) times, and the time series of utility cost reduction amount with respect to energy conservation investment is calculated. Using the WACC (Weighted Average Cost of Capital) as the discount rate, the present value of the utility cost reduction amount and the distribution of the present value of 1,000 pieces are obtained. Expected shortfall was adopted as a measure of downside risk, and the cap rates were estimated by calculating the risk premium for each energy-saving investment. The initial cost of the energy saving investment was estimated, and the distribution of 1,000 IRRs was obtained by combining it with the utility cost reduction amount calculated above. By applying modern portfolio theory, it became clear how to determine the optimal investment ratio for energy saving investment. </p>