LBNL announces the release of a new report: U.S. Energy Service Company (ESCO) Industry: Recent Market Trends. This study presents an analysis of the market size, growth projections and recent industry trends of the U.S. ESCO industry, drawing on information provided by ESCO executives in late 2015. We define ESCOs as energy service companies for whom performance-based contracting is a core business offering.
The Lab identified 47 firms in the U.S. that met our definition of an ESCO; 43 of these firms responded to our request for information. We report aggregate industry revenue as well as revenues by market segment, region and business activity type, and for new versus existing customers. We also report on use of tax incentives and financing tools and incorporation of non-energy benefits by ESCOs.
Key highlights from the report include:
- After more than two decades of year-over-year growth, ESCO industry revenues appeared to flatten between 2011 and 2014. ESCOs reported 2014 industry revenue of approximately $5.3 billion, the same as revenues reported in 2011.
- Based on ESCOs’ 3-year growth projections, the industry expects total annual industry revenues to be approximately $7.6 billion for 2017, which equates to an average annual growth rate of ~13% between 2015 and 2017.
- The share of industry revenue contributed by large ESCOs (annual energy services revenue of $300M or greater) declined from 56% in 2011 to 51% in 2014. Medium-sized ESCOs (annual revenue between $100M and $299M) increased market share from 29% in 2011 to 33% in 2014 while small ESCOs (annual revenue <$100M) increased market share from 15% in 2011 to 16% in 2014.
- New customers accounted for most performance-based revenues between 2012 and 2014, with some variance by market segment.
- ESCOs incorporated at least one of six key types of non-energy benefits in performance-based projects across all market segments.
- More than half of the ESCOs serving each market segment reported leveraging local, state or federal tax benefits in projects.
The authors discuss a number of factors that may have contributed to the industry growth slowdown between 2011 and 2014. Download the report here: http://emp.lbl.gov/publications.
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