According to a new Navigant Research report, global energy service company revenue is expected to experience a compound annual growth rate of 4.5% between 2020 and 2029, reaching $28.7 billion by the end of the forecast period.
The report analyzes the global market for energy service companies (ESCOs), providing forecasts, segmented by region, country and customer and equipment type, through 2029.
ESCOs evolved in the US to provide access to energy efficiency technologies and services with a significant portion of revenue generated through energy savings performance contracts. This financing structure requires little to no upfront capital and transfers the performance risk of the project from the end-use customer to the ESCO. Today, the US ESCO market is mature, and it is growing in other regions of the world, despite challenges.
“ESCO offerings have gained recognition as a valuable way for public organizations to realize sustainability mandates while meeting operational, financial, and human capital goals,” says Sasha Wedekind, research analyst with Navigant Research. “Though growth is expected to continue, it is expected to be challenging to capture due to pressure from competing energy services models and changing customer expectations.”
On the demand side, clients are becoming more sophisticated and are looking for cost-effective, customized, and comprehensive energy solutions to meet their needs beyond energy efficiency upgrades. On the supply side, energy suppliers and vendors are introducing a broader set of turnkey, portfolio-wide financial and business model options to meet emerging customer needs. According to the report, these trends require ESCOs to diversify project development efforts and develop new technology-agnostic capabilities and financing options outside of ESPC structures.
The report, ESCO Global Market Analysis and Forecast, analyzes the global ESCO market, with a focus on three key regions: North America, Europe, and Asia Pacific. The study estimates the ESCO market size and forecast as total revenue generated annually from long-term contracting models with savings performance guarantees and examines market barriers and drivers, and regional opportunities and challenges. Global market forecasts, segmented by region, country, and customer and equipment type, extend through 2029.
