Policy solution and game analysis for addressing the challenge of developing public–private partnership energy project

Various developing countries have been promoting public–private partnership (PPP) infrastructure
projects in recent years. Energy infrastructure project construction, which needs substantial capital
investments, is a cornerstone of and supports economic development. A PPP-based energy
infrastructure project is beneficial for alleviating developing countries’ financial burden and for
facilitating the diversified development of the energy market. Therefore, to increase government
income and reduce infrastructure project costs, the PPP energy project construction model attracts
considerable attention of various industries, especially in developing countries. For example, as gross
domestic product growth decelerates and the government debt ratio rapidly increases, many Chinese
provinces and cities face financial obstacles to economic development; therefore the Chinese
government has issued a series of PPP-based energy policies. However, a number of risk factors
associated with PPP projects, and conflicting interests between governments and private investors,
have resulted in project failure. This study analyzes the development of PPP in China from the
economic and industrial development perspective. It combines the latest PPP energy policies of China
to solve problems that stem from the main risk factors involved in constructing and operating PPP
energy projects. This research also provides game analysis for achieving maximum benefits as the
government and the private investor have conflicting interests.