Berkeley Lab Tracks Energy Services Growth

A recently issued report from the Lawrence Berkeley National Laboratory and the National Assn. of Energy Service Companies (NAESCO) documents that the revenues of energy service companies (ESCOs) grew by 20% per year from 2004 to 2006 and totaled about $3.6 billion in 2006.

According to the study, “A Survey of the U.S. ESCO Industry Market Growth and Development from 2000 to 2006,” energy efficiency accounted for almost three quarters of those revenues (or $2.5 billion per year). The authors state that one of the more interesting survey findings is that the private-sector investment in energy efficiency leveraged by ESCOs is comparable to the dollar amount of the authorized spending for utility and public benefit energy efficiency programs.

Buddy Hahs, chairman of NAESCO and CEO of Custom Energy Services, said that the survey “represents a snapshot of the increasingly significant role that ESCOs play in delivering large blocks of energy efficiency resources to a wide range of building owners and end users.” Customer-sited generation, including those employing renewable energy technologies, also was an important growth area for ESCOs.

The authors of the report suggest that a consensus appears to be emerging among many regulators, utilities, legislators and customers on moving energy efficiency forward as a high-priority resource. Adam Procell, vice chairman of NAESCO and vice president of DMJM Harris, said that “as initiatives are being developed to encourage and support increased energy-efficiency investment, it is increasingly important to understand the process for procuring and delivering energy efficiency resources in various markets.”

The LBNL-NAESCO survey results are based on interviews with 33 of 46 leading ESCOs. The report attributes the increases in ESCO activity to customer response to rising energy prices, renewed interest in energy efficiency and climate change, re-authorization of energy savings performance contracts in the federal market, the adoption of aggressive energy savings goals for federal agencies, and the ramping up of public-benefit and ratepayer-funded energy efficiency and renewable energy programs. ESCOs also project high growth rates for the next two years.

In addition, the composition of the ESCO industry continues to evolve with significant industry consolidation since 2000.

ESCOs can be an important trade ally, one author said, in selected market sectors for program administrators of utility ratepayer-funded energy efficiency programs. ESCOs can complement and support energy efficiency programs.