Second study forecasts strong growth for energy service companies (ESCOs)

Oct. 8, 2013
Energy efficiency companies, or ESCOs, are poised to grow significantly from 2013 to 2020, according to a new report by Navigant Research. The study foresees growth in projects for the federal government, a result of such efforts as the 2011 Better Buildings Initiative, expected to generate $2 billion in energy performance contracts.

The US energy service company (ESCO) industry is set to grow from a $4.9 billion market in 2013 to almost $8.3 billion in 2020, according to a new report by Navigant Research.

The growth comes after a slowdown in business for the energy performance contractors, Navigant says.

“Over the past two years, ESCOs have found it difficult to attract customers and convert backlog into revenue,” said Eric Bloom, senior research analyst with Navigant Research.  “The difficulties imposed on key customer segments, such as municipalities, by weak economic conditions across the United States have constrained demand.  Over the next seven years, though, growth is expected to resume as energy efficiency measures take effect across a broad swath of the economy.”

The study foresees significant growth in projects for the federal government, a result of such efforts as the 2011 Better Buildings Initiative, expected to generate $2 billion in energy performance contracts by the end of 2013.

An improving economy also will spur work for ESCOs from commercial and industrial firms and public housing, according to the report, “The U.S. Energy Service Company Market.”

The report notes that the ESCO market encompasses several large building equipment manufacturers such as Johnson Controls and Honeywell, as well utility and engineering-related companies.

A recent report by the Department of Energy’s Lawrence Berkeley National Laboratory forecast even greater expansion for the industry.   The report analyzed the largest ESCOs and found revenues could grow to $15 billion in 2020.

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is the editor and founder of EnergyChangemakers.com. She is co-founder and former editor of Microgrid Knowledge.

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