After two years of a difficult market, business appears to be reviving for energy service companies (ESCOs), according to a report by Navigant Research.
Schools – from kindergarten through college – continue to be the prime source of contracts. Navigant forecasts schools will provide $22 billion in cumulative ESCO revenue from 2013 through 2020.
“The ESCO market continues to be concentrated in municipalities, universities, schools, and hospitals, known as the ‘MUSH’ market,” says Eric Bloom, senior research analyst with Navigant Research. “K-12 schools, which present the largest opportunity for ESCOs, are designed to last for many decades, and many public school buildings in operation today are characterized by out-of-date HVAC, lighting, and control systems that could benefit considerably from system upgrades.”
ESCOs also continue to secure a lot of their business through the federal government, the report said.
Customer finances and unfavorable government policy slowed growth for ESCOs in recent years. However, a turnaround appears to be afoot, led in part by growing demand for renewable energy and distributed energy, according to the report. ESCOs are shifting their business models to accommodate these new market demands. Navigant forecasts that the US ESCO market will grow from $4.9 billion in 2013 to $8.3 billion by 2020.
More information is available here about the report, “The U.S. Energy Service Company Market.”