ESCOs are key enablers of investments in energy efficiency because they deliver efficiency projects based on long-term contracts tied to energy performance. ESCOs may finance initial
project costs directly or with the involvement of a third party, while the customer is not required to make the upfront capital expenditure. This contracting structure is critical to the success of ESCO financing. since upfront costs for efficiency upgrades often present a barrier to investment, and long-term contracts allow ESCOs to deliver more comprehensive energy efficiency improvements.
Global ESCO market growth 2015-18
The IEA tracks key trends and developments in the global ESCO market, which grew to USD 30.9 billion in 2018, from USD 28.6 billion in 2017 (Figure 3.11). China continues to dominate
the global ESCO market.
Policymakers seeking to increase investments in efficiency through ESCOs can draw on lessons from both emerging and developed economies. ESCO associations, for example, have been
established in several countries. They are vital sources of information for policymakers and help to raise awareness among financial institutions. They connect ESCO representatives with
customers and/or public officials, and support the development of important tools, for example, standardized contracts or protocols for measuring and verifying efficiency savings. Governments
have also promoted ESCO markets by inviting ESCOs to bid for performance contracts to retrofit public buildings, for example. Additional measures that have been effectively deployed in several
countries include ESCO project databases and other information tools, and capacity building such as training for public officials tasked with developing complex calls for ESCO project tenders.
Download full report: https://webstore.iea.org/download/direct/2891?fileName=Energy_Efficiency_2019.pdf