The U.S. Energy Service Company Market

Energy Performance Contracting and Energy Efficiency Retrofits
for the MUSH, Federal, Commercial & Industrial, and Public Housing Sectors

The U.S. energy service company (ESCO) market has been championed over the last 30 years as a breakthrough in energy efficiency financing. ESCOs use a range of energy efficiency financing instruments, such as energy performance contracting (EPC), to help customers finance energy efficiency upgrades through the future energy savings that energy efficiency can generate. This market is strongest in the municipal, university, schools, and hospital (MUSH) sector, with significant activity in the federal sector as well. The market landscape includes a number of large building equipment manufacturers such as Johnson Controls and Honeywell, as well as other ESCOs affiliated with utilities and engineering service providers.

In recent years, the U.S. ESCO market has gone through a difficult period. Customer concerns about the impact of EPCs on their financial position, as well as a lack of supportive policies, have slowed market activity. Since many of the resources, including policy measures, that drove growth prior to 2011 have been exhausted, ESCO market activity has slowed considerably. Various ESCOs have reported declines in revenue in 2012 and 2013 compared with 2011. However, as the market regains health over the next 2 to 3 years, the ESCO business model will start to evolve. Growing demand for renewable energy systems and distributed energy infrastructure is leading many ESCOs to develop and acquire new capabilities. Navigant Research forecasts that the U.S. ESCO market will grow from $4.9 billion in 2013 to $8.3 billion by 2020.

This Navigant Research report examines the ESCO market in the United States, detailing drivers and barriers to the deeper penetration of energy efficiency in the U.S. economy. The study covers all ESCO sectors, including MUSH, federal, commercial and industrial, and public housing. Market forecasts of ESCO revenue in the United States, segmented by sector and technology, extend through 2020. The report also analyzes various ESCO financing models and energy efficiency technologies and profiles key industry players.

Key Questions Addressed:
  • What is an ESCO?
  • Who are the key players in the U.S. ESCO market?
  • How is the ESCO business model changing?
  • What are the key market and policy drivers supporting the U.S. ESCO market?
  • How large is the U.S. ESCO market and which segments will experience the fastest growth?
Who needs this report?
  • Energy service companies
  • Engineering service providers
  • Building energy management system (BEMS) software vendors
  • Building automation system (BAS) vendors
  • Utilities
  • Commercial building owners and managers
  • Corporate energy managers
  • Industry associations
  • Government agencies
  • Investor community

Table of Contents

1. Executive Summary

1.1 Overview of the U.S. Energy Service Company Market

1.2 Market Conditions

1.3 Market Size and Forecast

2. Market Issues

2.1 Overview

2.2 Defining the ESCO Market

2.2.1  Energy Performance Contracting

2.2.2  ESCOs and the Public Sector

2.2.3  Evolution of the ESCO Market

2.2.3.1  Consolidation and Divestiture

2.3 Current Market Landscape

2.3.1  Utilities

2.3.2  Building Equipment OEMs

2.3.3  Engineering Services Firms

2.3.4  Independent ESCOs

2.3.5  Other ESCOs

2.4 Market Drivers

2.4.1  Negative Economic Indicators

2.4.2  Federal Programs Supporting ESCOs

2.4.2.1  Better Buildings Initiative

2.4.2.2  Energy Policy Act of 2005

2.4.2.3  Energy Independence and Security Act of 2007

2.4.2.4  Executive Orders

2.4.2.5  ARRA 2009

2.4.3  Aging Infrastructure

2.4.4  Availability of Low-Interest Financing Options

2.4.5  State Energy Efficiency Initiatives

2.4.5.1  California

2.4.5.2  New York

2.4.6  Utility Energy Efficiency Programs

2.4.7  Property Assessed Clean Energy Financing

2.4.8  Strong Market Fundamentals

2.5 Market Barriers

2.5.1  EPC and Municipal Debt

2.5.2  Federal Sequester

2.5.3  Heightened Scrutiny of EPC and Increased Sales Cycles

2.5.4  Inflexibility of the EPC Model

2.6 Market Dynamics by Customer Type

2.6.1  Average Project Size by Customer Type

2.6.2  MUSH Market

2.6.2.1  K-12 Schools

2.6.2.2  State and Local Governments

2.6.2.3  Universities and Colleges

2.6.2.4  Hospitals

2.6.3  Federal

2.6.3.1  Utility Energy Service Contracts

2.6.3.2  Super ESPCs

2.6.3.3  DA ESCOs

2.6.4  Commercial and Industrial

2.6.5    Public Housing

3. Technology and Financing Issues

3.1 Energy Efficiency Technologies and Services

3.1.1  Heating

3.1.2  Cooling

3.1.3  Hot Water

3.1.4  Controls and Building Management Systems

3.1.5  Indoor Air Quality and Ambient Comfort

3.1.6  Lighting

3.1.7  Commissioning

3.1.8  Payback Periods for Energy Efficiency Measures

3.2 Renewable Energy

3.2.1  Solar

3.2.2  Biogas and Landfill Gas

3.3 Distributed Energy Generation

3.3.1  Microgrids

3.4 Smart Building Technologies

3.4.1  Building Energy Management Systems

3.4.2  Demand Response

3.5 ESCO Financing Models

3.5.1  Energy Performance Contracting

3.5.1.1  Energy Savings Performance Contracts

3.5.1.2  Utility Energy Service Contracts

3.5.1.3  Shared Savings Agreements

3.5.2  Power Purchase Agreements

3.5.3  Energy Supply Contracts

3.5.4  Energy Service Agreements

3.5.5  Property Assessed Clean Energy Financing

4. Key Industry Players

4.1 Overview

4.2 Level 1 ESCOs

4.2.1  Ameresco

4.2.2  Honeywell

4.2.3  Johnson Controls, Inc.

4.2.4  NORESCO

4.2.5  Schneider Electric

4.2.6  Siemens

4.2.7  Trane

4.3 Level 2 ESCOs and Other Players

4.3.1  Burns & McDonnell

4.3.2  Clark Energy Group

4.3.3  Chevron Energy Solutions

4.3.4  ConEdison Solutions

4.3.5  Constellation NewEnergy

4.3.6  Eaton

4.3.7  Energy Systems Group

4.3.8  Florida Power & Light/NextEra Energy Services

4.3.9  Lockheed Martin

4.3.10 McKinstry

4.3.11 Metrus Energy

4.3.12 Pepco Energy Services

4.3.13 Science Applications International Corporation

4.4 Other Players

5. Market Forecasts

5.1 Overview

5.2 Methodology

5.2.1  Primary Research

5.2.2  Secondary Research

5.3 Assumptions

5.3.1  Scope of the U.S. ESCO Market

5.3.2  Changes from the 2012 U.S. ESCO Market Study

5.4 Market Size and Forecast

5.4.1  U.S. ESCO Market by Sector

5.4.1.1  MUSH Market

5.4.1.2  Federal

5.4.1.3  Commercial & Industrial

5.4.1.4  Public Housing

5.4.2  U.S. ESCO Market by Technology

5.5 Conclusions and Recommendations

6. Company Directory
7. Acronym and Abbreviation List
8. Table of Contents
9. Table of Charts and Figures
10. Scope of Study, Sources and Methodology, Notes

List of Charts and Figures

  • ESCO Revenue, United States: 2010-202
  • Commercial Building Space by Owner Type, United States: 2003
  • Utility Energy Efficiency Program Budgets, North America: 2008-2012
  • Average Project Cost by Customer Type, United States: 2013Building Floor Space by Owner Type, MUSH Markets, United States: 2003
  • Federal IDIQ ESPC Revenue by ESCO, United States: 2008-2013
  • Payback Periods for Select Energy Efficiency Measures by Year: 2013
  • ESCO Revenue Market Share by ESCO, United States: 2011-2015
  • ESCO Revenue by Customer Type, United States: 2010-2020
  • ESCO Revenue Market Share by Customer Type, United States: 2013
  • ESCO Revenue by Technology, United States: 2010-2020
  • Diagram of an Energy Performance Contract
  • ESCO Market Landscape by Company Parent Type

List of Tables

  • Commercial Building Space by Owner Type, United States: 2003
  • Utility Energy Efficiency Program Budgets, North America: 2008-2012
  • Average Project Cost by Customer Type, United States: 2013
  • Building Floor Space by Owner Type, MUSH Markets, United States: 2003
  • Federal IDIQ ESPC Revenue by ESCO, United States: 2008-2013
  • Payback Periods for Select Energy Efficiency Measures by Year: 2013
  • ESCO Revenue Market Share by ESCO, United States: 2011-2015
  • Major ESCO Mergers and Acquisitions, World Markets: 2004-2013
  • ESCO Market Drivers and Barriers by Customer Type
  • ESCOs Awarded ESPCs
  • Common ESCO Financing Models by Sector: 2013
  • Ameresco SWOT Analysis
  • Honeywell SWOT Analysis
  • Johnson Controls SWOT Analysis
  • NORESCO SWOT Analysis
  • Schneider Electric SWOT Analysis
  • Siemens SWOT Analysis
  • Trane SWOT Analysis
  • Other Small and Medium U.S. ESCOs
  • ESCO Revenue by Customer Type, United States: 2010-2020
  • ESCO Revenue by Technology, United States: 2010-2020

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