ESCO Market Overview

HVAC/Mechanical, Lighting, Commercial Building Automation System, Building Energy Management System, Water, and Renewables Technologies and Equipment: Global Market Analysis and Forecasts

Energy service companies (ESCOs) have been instrumental in providing access to energy efficiency technologies and services in market segments that would not normally be able to consider or afford these types of capital-intensive projects. In the mature US market and maturing markets of other regions, public sector and municipalities, universities, schools, and hospitals (MUSH) market customers have benefited from the energy savings performance contract (ESPC) financing structure. This structure requires little to no upfront capital and moves the financial risk of the project from the end-use customer to the ESCO.

Today, digitization is affecting almost all aspects of the energy efficient buildings market, and ESCOs and their customers are not immune from this shift. ESCOs are realizing the growing value of digitization as the volume of data coming from buildings is used to create unique sources of information that adds value. Data captured from existing and new projects has allowed ESCOs to develop sophisticated statistical models to help stakeholders understand building performance and end-use customer operational, maintenance, and comfort issues. The ESCO business model and the energy performance contract (EPC) financing structure are gaining recognition as a valuable way for public and private organizations to realize sustainability mandates. According to Navigant Research, the global ESCO market is expected to grow from $15.0 billion in 2017 to $30.8 billion in 2026.

This Navigant Research report analyzes the global ESCO market, with a focus on three key regions: North America, Western Europe, and Asia Pacific. The study provides an analysis of market dynamics for the main ESCO customer segments, including market barriers and drivers, regional opportunities and challenges, and the competitive landscape. Global market forecasts, segmented by region, country, and customer and equipment type, extend through 2026. The report also examines the ESCO value chain and financing models.

Key Questions Addressed:
  • How are business models for energy service companies (ESCOs) evolving?
  • Which regions of the world are experiencing the fastest ESCO market growth?
  • What are the additional benefits of ESCO projects beyond cost savings?
  • Which companies are the leading global ESCOs?
  • What are the fastest growing ESCO customer segments in each region?
Who needs this report?
  • Energy service companies (ESCOs)
  • Energy efficient building technology vendors
  • Utilities
  • Universities and colleges
  • Hospitals and healthcare facilities
  • Government agencies
  • Investor community

Table of Contents

1. Executive Summary

1.1   Market Overview

1.2   Market Trends

1.3   ESCO Market Size and Forecasts

2. Market Issues

2.1   Overview

2.2   Report Scope and Definitions

2.3   ESCO Value Chain

2.3.1   Energy Audit

2.3.2   Design and Engineering

2.3.3   Equipment

2.3.4   Installation

2.3.5   Financing

2.3.6   Operations and Maintenance

2.3.7   Facilities Maintenance

2.3.8   Energy Sales

2.4   ESCO Financing Structures

2.4.1   EPCs

2.4.1.1    Managing EPC Risk

2.4.2   Additional ESCO Financing Models

2.4.2.1   PPAs

2.4.2.2   ESCs

2.4.2.3   ESAs

2.4.2.4    PACE Financing

2.5   Market Landscape

2.5.1   Digital Transformation of the ESCO Market

2.5.1.1    Increasing Demand for Ancillary Benefits

2.5.1.2   EPC Benefits Span the Enterprise

2.5.1.3    Coopetition Is a Necessity

2.5.1.4    Smart Digital Technology Is Enabling Trusted Advisor Relationship Opportunities

2.5.1.5    Municipalities and Intelligent Buildings

2.5.2   Market Barriers

2.5.2.1    EPC/ESPC Lengths

2.5.2.2    Political Landscape

2.5.2.3    Premium for ESCO Services

2.5.2.4    M&V for Guaranteed Savings

2.5.2.5    Energy Escalator to Account for Energy Price Volatility

2.5.2.6    Contract Terms and Conditions

2.5.3   Market Drivers

2.5.3.1    Cost Savings and Reduced Energy Consumption

2.5.3.2    ESCO Experience and Resources

2.5.3.3    Ancillary EPC Project Benefits

2.5.3.4    Power Reliability and Resilience

2.5.3.5   GHG Targets and Sustainability Initiatives

2.6   US Market Segmentation

2.6.1   Federal

2.6.1.1    Executive Order No. 13693

2.6.2   State and Local Government

2.6.3   Healthcare

2.6.4   Education

2.6.5   Commercial and Industrial

2.6.6   Public Housing

2.7   Global Market Development

2.7.1   Western Europe

2.7.2   Asia Pacific

2.7.3   Other Regions

3. Technology Issues

3.1   Overview

3.2   Lighting

3.2.1   Outdoor Lighting Systems

3.2.1.1   Street Lighting

3.2.1.2    City Parks and Public Areas

3.2.1.3    Parking Lots

3.2.1.4    University and College Campuses

3.3   HVAC/Mechanical

3.3.1   VRF Systems

3.4   Commercial Building Automation System

3.5   BEMS

3.6   Water

3.7   Renewables

3.8   Others

4. Key Industry Players

4.1   Overview

4.2   Building Technology Provider ESCO Business Units

4.2.1   Honeywell

4.2.2   Johnson Controls

4.2.3   Schneider Electric

4.2.4   Siemens

4.2.5   Trane

4.3   Utility Subsidiary ESCOs

4.3.1   Con Edison Solutions

4.3.2   Constellation

4.3.3   Energy Systems Group

4.3.4   NextEra Energy

4.4   Engineering Services Firms

4.4.1   AECOM

4.4.2   Lockheed Martin

4.4.3   McKinstry

4.5   Independent ESCOs

4.5.1   Ameresco

4.6    Private Sector Intermediaries

4.6.1   Metrus Energy

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   Forecast Scope

5.3.2   Scope of the Forecasts for the United States

5.3.3   Scope of the Forecasts for Europe

5.3.4   Scope of the Forecasts for Asia Pacific

5.3.5   Changes from Navigant Research’s 2015 ESCO Market Overview

5.4   Global Market Outlook

5.5   North America

5.5.1   United States

5.5.2   Canada

5.6   Western Europe

5.7   Asia Pacific

5.8   Conclusions and Recommendations

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

List of Charts and Figures

  • Most Important Drivers for Investment in Efficient Building Technologies: 2016
  • ESPC Programs by State, Spending per Capita, United States: 2017
  • Payback Periods for Illustrative ECMs
  • Energy Consumption by End Use and US Climate Zone, Grocery Stores
  • ESCO Revenue by Region, World Markets: 2017-2026
  • ESCO Market Share by Region, World Markets: 2017
  • ESCO Revenue by Customer Type, World Markets: 2017-2026
  • ESCO Revenue by Country, North America: 2017-2026
  • ESCO Revenue by Equipment Type, North America: 2017-2026
  • ESCO Revenue by Customer Type, United States: 2017-2026
  • ESCO Revenue by Customer Type, Canada: 2017-2026
  • ESCO Revenue by Country, Western Europe: 2017-2026
  • ESCO Revenue by Customer Type, Western Europe: 2017-2026
  • ESCO Revenue by Equipment Type, Western Europe: 2017-2026
  • ESCO Revenue by Country, Asia Pacific: 2017-2026
  • ESCO Revenue by Customer Type, Asia Pacific: 2017-2026
  • ESCO Revenue by Equipment Type, Asia Pacific: 2017-2026
  • Energy Services Value Chain
  • Visualizing the Energy Performance Contract Model
  • Example of HVAC BAS Components

List of Tables

  • Most Important Drivers for Investment in Intelligent Building Technologies: 2016
  • ESPC Programs by State, Spending per Capita, United States: 2017
  • Payback Periods for Illustrative ECMs
  • Energy Consumption by End Use and US Climate Zone, Supermarkets
  • ESCO Revenue by Region, World Markets: 2017-2026
  • ESCO Market Share by Region, World Markets: 2017 and 2026
  • ESCO Revenue by Customer Type, World Markets: 2017-2026
  • ESCO Revenue by Country, North America: 2017-2026
  • ESCO Revenue by Customer Type, United States: 2017-2026
  • ESCO Revenue by Customer Type, Canada: 2017-2026
  • ESCO Revenue by Equipment Type, North America: 2017-2026
  • ESCO Revenue by Country, Western Europe: 2017-2026
  • ESCO Revenue by Customer Type, Western Europe: 2017-2026
  • ESCO Revenue by Equipment Type, Western Europe: 2017-2026
  • ESCO Revenue by Country, Asia Pacific: 2017-2026
  • ESCO Revenue by Customer Type, Asia Pacific: 2017-2026
  • ESCO Revenue by Equipment Type, Asia Pacific: 2017-2026
  • Honeywell SWOT Analysis
  • Johnson Controls SWOT Analysis
  • Schneider Electric SWOT Analysis
  • Siemens SWOT Analysis
  • Trane SWOT Analysis

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