IEA Launches Online Resource on Energy Service Companies Around the World

In support of its continued focus on promoting the key role of energy efficiency, the IEA has launched a new web resource dedicated entirely to energy service companies (ESCOs).

ESCOs are in the business of delivering energy efficiency projects that are financed based on energy savings attained throughout the life of the project. For example, an ESCO installs an entirely new heating and cooling system in a hospital without the client (in this case the hospital administration) having to pay for the equipment. The cost of the project is recovered over several years through savings in electricity and gas spending.

Given the need to rapidly and significantly increase financing for energy efficiency, interest in ESCO business models is growing and markets are developing in many countries, with global ESCO revenues up 8% in 2017 compared to 2016.

The IEA’s new ESCO resource, which builds on the comprehensive Global Exchange for Energy Efficiency, features in-depth pages for 30 countries, interactive charts, a resource browser and a wealth of information on the global ESCO market.

The ESCO pages are based in part on an in-depth survey of more than 25 national ESCO associations conducted by the IEA in 2018. The survey covered ESCO financing models, energy performance contracting, and related policy measures. The survey also covered 80% of the major emerging economies (Brazil, China, India, Indonesia, Mexico and South Africa), 80% of the G20, and 60% of IEA member countries.

Information is also available on the characteristics of various ESCO markets across the globe. For example, the United States has the second largest and most established ESCO market globally and is characterised by significant enabling legislation, a predominance of public sector contracts and the widespread use of guaranteed savings contracts, whereby the ESCO guarantees a certain savings on a customer’s energy bill. This is in contrast to a country like Brazil, a younger market, with less enabling legislation and where contracting models are less developed.

The ESCO pages also highlight key changes or developments in specific markets. This includes the promotion of the ESCO market in China’s 12th Five-year plan through the establishment of a favourable accounting system, direct financial awards and tax incentives, as well as a USD 3 million dedicated ESCO fund.