The Energy Services Industry

An Energy Service Company (commonly referred to as an ESCO) is a business that develops, installs and arranges financing for projects designed to improve the energy efficiency and maintenance costs for facilities over a seven to twenty year time period. ESCOs generally act as project developers for a wide range of tasks while assuming the technical and performance risk associated with the project. Typically, they offer the following services:

  • develop, design, and arrange financing for energy efficiency projects;
  • install and maintain the energy efficient equipment involved;
  • measure, monitor, and verify the project’s energy savings; and
  • assume the risk that the project will save the amount of energy guaranteed.

These services are bundled into the project’s cost and are repaid through the dollar savings generated.

A recent survey of the energy series industry found that about $450 million of performance-based solution projects are undertaken each year. Together, these projects resulted in annual energy savings of about $45 million and savings of many million tonnes of green house gas (CO2e) emissions. It is further estimated that these savings resulted in over 4,000 direct jobs and a further 5,000 indirect jobs.