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Application and Mode Establishment of Asset-backed Securitization in Existing Large-scale Public Building Retrofit Financing in China
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Statistical data for 2005 show that electrical consumption of large-scale public buildings occupying 5 percent of total residential construction area equals 50 percent of the total residential electrical consumption in Beijing. It is necessary to reconstruct existing large-scale public buildings for large-scale public buildings having the characteristics of high-energy consumption and low-energy efficiency. Existing building retrofit is a system engineering involving technology, policy and management. There are fewer large-scale public building retrofit projects and the major funding is from national financial subsidies. There is no expediting financing channel and flexible financing mode. Therefore, this study designs asset-backed securitization (ABS) as the main financing mode according to steady future income of existing large-scale public buildings retrofit. That is, we secure the steady future income of existing large-scale public buildings retrofit, and sell it to special purpose vehicles (SPVs) through a series of asset structure optimizations and reorganizations so as to transfer stagnant assets or unforeseeable future incomes into real cash flow through issuing securities. This liquid cash flow can ensure the funds needed by existing large-scale public buildings retrofit. The ABS financing mode can satisfy the fund requirements of this project and reduce the ratio of liabilities to assets. Because the assets of backed securitization are good assets, it can effectively avoid converse selection risk to ensure economic safety. ABS also can offer a good financing mode for Energy Management Contract (EMC) and Energy Service Company (Esco) and promote healthy development of an energy-efficient service system.
Subjectexisting building retrofit
large-scale public building
energy efficient service
Sun, J.; Wu, Y.; Dai, Z.; Hao, Y. (2006). Application and Mode Establishment of Asset-backed Securitization in Existing Large-scale Public Building Retrofit Financing in China. Energy Systems Laboratory (http://esl.tamu.edu); Texas A&M University (http://www.tamu.edu). Available electronically from