Market Trends in the U.S. ESCO Industry: Results from the NAESCO Database Project

TitleMarket Trends in the U.S. ESCO Industry: Results from the NAESCO Database Project
Publication TypeReport
Year of Publication2002
AuthorsGoldman, Charles A., Julie G. Osborn, Nicole C. Hopper, and Terry E. Singer
Pagination107
Date Published05/2002
PublisherLBNL
Place PublishedBerkeley
Keywordselectricity markets and policy group, energy analysis and environmental impacts department
Abstract

The U.S. Energy Services Company (ESCO) industry is often cited as the most successful model for the private sector delivery of energy-efficiency services. This study documents actual performance of the ESCO industry in order to provide policymakers and investors with objective information and customers with a resource for benchmarking proposed projects relative to industry performance. We have assembled a database of nearly 1500 case studies of energy efficiency projects – the most comprehensive data set of the U.S. ESCO industry available. These projects include $2.55B of work completed by 51 ESCOs and span much of the history of this industry. We estimate that the ESCO industry completed $1.8-2.1B of projects in 2000. The industry has grown rapidly over the last decade with revenues increasing at a 24% annualized rate. We summarize and compare project characteristics and costs and analyze energy savings, including the relationship between predicted and actual savings. ESCOs typically invested about $2.30/ft per project in various energy efficiency improvements, although there is large variation in project costs within and across market segments. We find that lighting-only projects report median electricity savings of 47% of targeted equipment consumption; the median for lighting-&-nonlighting projects is 23% of the total electric bill baseline. We examine project economics, including project net benefits, benefit/cost ratio and simple payback time. Median simple payback time is seven years for institutional sector projects and three years in the private sector. We estimate direct economic benefits of $1.62 billion for the 1080 projects in our database with both cost and savings data. The median benefit/cost ratio is 2.1 for 309 private sector projects and 1.6 for 771 institutional sector projects. We discuss the role of policies and programs adopted by state/federal legislatures and agencies that have played an important role in stimulating ESCO activity in various markets. Finally, we estimate the overall size and growth of the energy-efficiency services industry over the last ten years based on a survey of 63 ESCOs.

Citation Key553
Refereed DesignationUnknown
AttachmentSize
Report PDF451.21 KB
Appendix PDF706 KB