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Title: U.S. Energy Service Company Industry: Market Size and Project Performance from 1990-2008

Abstract

The U.S. energy service company (ESCO) industry is an example of a private sector business model where energy savings are delivered to customers primarily through the use of performance-based contracts. This study was conceived as a snapshot of the ESCO industry prior to the economic slowdown and the introduction of federal stimulus funding mandated by enactment of the American Recovery and Reinvestment Act of 2009 (ARRA). This study utilizes two parallel analytic approaches to characterize ESCO industry and market trends in the U.S.: (1) a ?top-down? approach involving a survey of individual ESCOs to estimate aggregate industry activity and (2) a ?bottom-up? analysis of a database of ~;;3,250 projects (representing over $8B in project investment) that reports market trends including installed EE retrofit strategies, project installation costs and savings, project payback times, and benefit-cost ratios over time. Despite the onset of a severe economic recession, the U.S. ESCO industry managed to grow at about 7percent per year between 2006 and 2008. ESCO industry revenues were about $4.1 billion in 2008 and ESCOs anticipate accelerated growth through 2011 (25percent per year). We found that 2,484 ESCO projects in our database generated ~;;$4.0 billion ($2009) in net, direct economic benefits to theirmore » customers. We estimate that the ESCO project database includes about 20percent of all U.S. ESCO market activity from 1990-2008. Assuming the net benefits per project are comparable for ESCO projects that are not included in the LBNL database, this would suggest that the ESCO industry has generated ~;;$23 billion in net direct economic benefits for customers at projects installed between 1990 and 2008. There is empirical evidence confirming that the industry is evolving by installing more comprehensive and complex measures?including onsite generation and measures to address deferred maintenance?but this evolution has significant implications for customer project economics, especially at K-12 schools. We found that the median simple payback time has increased from 1.9 to 3.2 years in private sector projects since the early-to-mid 1990s and from 5.2 to 10.5 years in public sector projects for the same time period.« less

Authors:
; ;
Publication Date:
Research Org.:
Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)
Sponsoring Org.:
USDOE Office of Science (SC)
OSTI Identifier:
1173272
Report Number(s):
LBNL-5819E
Journal ID: 0301-4215
DOE Contract Number:  
DE-AC02-05CH11231
Resource Type:
Journal Article
Journal Name:
Energy Policy
Additional Journal Information:
Journal Name: Energy Policy
Country of Publication:
United States
Language:
English
Subject:
29 ENERGY PLANNING, POLICY, AND ECONOMY; ESCO; energy efficiency; industry size; project performance; economic analysis

Citation Formats

Larsen, Peter, Goldman, Charles, and Satchwell, Andrew. U.S. Energy Service Company Industry: Market Size and Project Performance from 1990-2008. United States: N. p., 2012. Web. doi:10.1016/j.enpol.2012.08.035.
Larsen, Peter, Goldman, Charles, & Satchwell, Andrew. U.S. Energy Service Company Industry: Market Size and Project Performance from 1990-2008. United States. doi:10.1016/j.enpol.2012.08.035.
Larsen, Peter, Goldman, Charles, and Satchwell, Andrew. Tue . "U.S. Energy Service Company Industry: Market Size and Project Performance from 1990-2008". United States. doi:10.1016/j.enpol.2012.08.035. https://www.osti.gov/servlets/purl/1173272.
@article{osti_1173272,
title = {U.S. Energy Service Company Industry: Market Size and Project Performance from 1990-2008},
author = {Larsen, Peter and Goldman, Charles and Satchwell, Andrew},
abstractNote = {The U.S. energy service company (ESCO) industry is an example of a private sector business model where energy savings are delivered to customers primarily through the use of performance-based contracts. This study was conceived as a snapshot of the ESCO industry prior to the economic slowdown and the introduction of federal stimulus funding mandated by enactment of the American Recovery and Reinvestment Act of 2009 (ARRA). This study utilizes two parallel analytic approaches to characterize ESCO industry and market trends in the U.S.: (1) a ?top-down? approach involving a survey of individual ESCOs to estimate aggregate industry activity and (2) a ?bottom-up? analysis of a database of ~;;3,250 projects (representing over $8B in project investment) that reports market trends including installed EE retrofit strategies, project installation costs and savings, project payback times, and benefit-cost ratios over time. Despite the onset of a severe economic recession, the U.S. ESCO industry managed to grow at about 7percent per year between 2006 and 2008. ESCO industry revenues were about $4.1 billion in 2008 and ESCOs anticipate accelerated growth through 2011 (25percent per year). We found that 2,484 ESCO projects in our database generated ~;;$4.0 billion ($2009) in net, direct economic benefits to their customers. We estimate that the ESCO project database includes about 20percent of all U.S. ESCO market activity from 1990-2008. Assuming the net benefits per project are comparable for ESCO projects that are not included in the LBNL database, this would suggest that the ESCO industry has generated ~;;$23 billion in net direct economic benefits for customers at projects installed between 1990 and 2008. There is empirical evidence confirming that the industry is evolving by installing more comprehensive and complex measures?including onsite generation and measures to address deferred maintenance?but this evolution has significant implications for customer project economics, especially at K-12 schools. We found that the median simple payback time has increased from 1.9 to 3.2 years in private sector projects since the early-to-mid 1990s and from 5.2 to 10.5 years in public sector projects for the same time period.},
doi = {10.1016/j.enpol.2012.08.035},
journal = {Energy Policy},
number = ,
volume = ,
place = {United States},
year = {2012},
month = {8}
}