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Title: Understanding recent market trends of the US ESCO industry

Abstract

The US energy services company (ESCO) industry is an example of a private-sector business model that delivers energy savings to customers primarily through the use of performance-based contracts. US ESCO projects garner significant incremental annual savings: approximately 1% of total US commercial building consumption in 2014. From 2000 to 2011, the industry experienced year over year growth; however, based on information drawn from interviews with ESCO executives conducted in late 2015, the authors find that from 2012 to 2014, ESCO industry revenues did not increase. While public and institutional market sectors accounted for 85% of industry revenue in 2014, consistent with previous research findings, the share of revenue from performance contracting increased to 74% in 2014, as compared to 69% share reported for 2011 and 2008. The revenue numbers between 2011 and 2014 are not fully comparable, because a few ESCOs that were subsidiaries of larger companies had undergone reorganization and some categories of revenue reported in 2011 were not included for 2014. Other factors that may have contributed to the recent revenue trend include the following: (1) increased competition from companies not historically defined as an ESCO (e.g. mechanical contractors), (2) uncertainty among some potential customers about committing tomore » long-term performance contracts, and (3) reduction of performance contracting’s perceived benefit of hedging energy price increases and variability due to customer expectations of continued low and less volatile energy prices.« less

Authors:
ORCiD logo [1];  [2];  [3];  [1];  [4]
  1. Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)
  2. Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States); Univ. of California, Berkeley, CA (United States). Renewable and Appropriate Energy Lab.
  3. Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States); Stanford Univ., CA (United States). Dept. of Management Science and Engineering
  4. National Association of Energy Service Companies, Washington, DC (United States)
Publication Date:
Research Org.:
Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)
Sponsoring Org.:
USDOE Office of Energy Efficiency and Renewable Energy (EERE)
OSTI Identifier:
1457002
DOE Contract Number:  
AC02-05CH11231
Resource Type:
Journal Article
Journal Name:
Energy Efficiency
Additional Journal Information:
Journal Volume: 11; Journal Issue: 6; Journal ID: ISSN 1570-646X
Publisher:
Springer
Country of Publication:
United States
Language:
English
Subject:
32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION; ESCO; Energy service companies; Energy efficiency; Economic trends

Citation Formats

Stuart, Elizabeth, Carvallo, Juan Pablo, Larsen, Peter H., Goldman, Charles A., and Gilligan, Donald. Understanding recent market trends of the US ESCO industry. United States: N. p., 2018. Web. doi:10.1007/s12053-018-9633-9.
Stuart, Elizabeth, Carvallo, Juan Pablo, Larsen, Peter H., Goldman, Charles A., & Gilligan, Donald. Understanding recent market trends of the US ESCO industry. United States. doi:10.1007/s12053-018-9633-9.
Stuart, Elizabeth, Carvallo, Juan Pablo, Larsen, Peter H., Goldman, Charles A., and Gilligan, Donald. Thu . "Understanding recent market trends of the US ESCO industry". United States. doi:10.1007/s12053-018-9633-9.
@article{osti_1457002,
title = {Understanding recent market trends of the US ESCO industry},
author = {Stuart, Elizabeth and Carvallo, Juan Pablo and Larsen, Peter H. and Goldman, Charles A. and Gilligan, Donald},
abstractNote = {The US energy services company (ESCO) industry is an example of a private-sector business model that delivers energy savings to customers primarily through the use of performance-based contracts. US ESCO projects garner significant incremental annual savings: approximately 1% of total US commercial building consumption in 2014. From 2000 to 2011, the industry experienced year over year growth; however, based on information drawn from interviews with ESCO executives conducted in late 2015, the authors find that from 2012 to 2014, ESCO industry revenues did not increase. While public and institutional market sectors accounted for 85% of industry revenue in 2014, consistent with previous research findings, the share of revenue from performance contracting increased to 74% in 2014, as compared to 69% share reported for 2011 and 2008. The revenue numbers between 2011 and 2014 are not fully comparable, because a few ESCOs that were subsidiaries of larger companies had undergone reorganization and some categories of revenue reported in 2011 were not included for 2014. Other factors that may have contributed to the recent revenue trend include the following: (1) increased competition from companies not historically defined as an ESCO (e.g. mechanical contractors), (2) uncertainty among some potential customers about committing to long-term performance contracts, and (3) reduction of performance contracting’s perceived benefit of hedging energy price increases and variability due to customer expectations of continued low and less volatile energy prices.},
doi = {10.1007/s12053-018-9633-9},
journal = {Energy Efficiency},
issn = {1570-646X},
number = 6,
volume = 11,
place = {United States},
year = {2018},
month = {3}
}