The U.S. energy service company (ESCO) industry is an example of a private-sector business model where energy efficiency savings are delivered to customers primarily through the use of performance-based contracts. Despite the onset of a severe economic recession, we estimate that the U.S. ESCO industry grew about 7% per year from 2006 to 2008 with annual revenues of about $4.1 billion in 2008. About 75% of industry revenues are directly related to the installation of energy efficiency measures at existing buildings in the institutional, commercial, and industrial sectors.
The ESCO business model in the United States continues to evolve with ESCOs undertaking more complex and comprehensive projects that involve combining numerous energy efficiency measures with onsite generation. This paper draws upon an ESCO industry survey conducted in 2009/2010 as well as results from the Lawrence Berkeley National Laboratory (LBNL)/National Association of ESCOs (NAESCO) database of projects. The survey results indicate that U.S. ESCO industry revenue related to installations of onsite generation increased 40% from 2006 to 2008. We also analyze typical project-level savings and installation costs. This paper focuses on comprehensive ESCO projects in various target markets that installed both onsite generation and energy efficiency measures. We discuss factors that may contribute to the increased deployment of renewable energy and onsite generation technologies including the possibility that ESCOs are leveraging publicly-funded incentives and government tax credits for renewable energy projects.