January 6, 2010
Spawned by the oil crisis of the 1970s, the Energy Service Company (ESCO) business in the United States has proven to be a successful and resilient model for improving the energy efficiency of commercial and public buildings. According to a new report from Pike Research, the ESCO industry is poised for strong continued growth, and the cleantech market intelligence firm forecasts under a base case scenario that ESCO revenues will increase by more than 250% in the coming years, from $5.6 billion in 2009 to nearly $19.9 billion by 2020.
“The largest opportunities for ESCOs lie in expanding their reach to new building sectors,” says research analyst Jevan Fox. “With 80% of the market currently in the institutional and federal sectors, private commercial buildings are the next frontier for ESCOs. However, private building owners still lack the proper financing structures and incentives to take advantage of this opportunity.”
With such mechanisms in place, such as Property Assessed Clean Energy (PACE) financing that is starting to gain traction around the country, Pike Research estimates that ESCO market could accelerate well beyond the firm’s base case scenario. An aggressive growth forecast scenario, which assumes greater utilization of PACE financing as well as cap and trade legislation and a tax on carbon emissions, could yield an annual ESCO market of $37.6 billion by 2020, representing a more than six-fold increase over 2009 revenues.
Pike Research’s study, “The U.S. Energy Service Company Market”, examines the commercial buildings market by end-use, identifying the solution opportunities for ESCOs and highlighting key industry drivers. The report analyzes the framework for rapid growth in this market, with forecasts that include base case and aggressive growth scenarios through 2020. An Executive Summary of the report is available for free download on the firm’s website.
Pike Research is a market research and consulting firm that provides in-depth analysis of global clean technology markets. The company’s research methodology combines supply-side industry analysis, end-user primary research and demand assessment, and deep examination of technology trends to provide a comprehensive view of the Smart Energy, Clean Transportation, Clean Industry, Corporate Sustainability, and Building Efficiency sectors. For more information, visit www.navigantresearch.com or call +1.303.284.9609.