A method to estimate the size and remaining market potential of the U.S. ESCO (energy service company) industry

This study presents a method to estimate the market investment potential for ESPC (energy-saving performance contracts) and annual blended energy savings remaining in buildings typically addressed by U.S. ESCOs (energy service companies). We define ESCOs as companies for whom performance-based contracting is a core business activity. The market potential analysis incorporates market penetration estimates provided by industry experts in late 2012, data on U.S. building stock typically addressed by ESCOs, and typical project investment costs from a database of 4000 + projects. ESCO industry revenue growth significantly outpaced U.S. GDP (gross domestic product) growth during 2009-2011. We estimate that the remaining investment potential in facilities typically addressed by the ESCO industry ranges from ∼$71 to $133 billion. Our analysis includes ESCO industry size and growth projections drawing on information from interviews with ESCO executives conducted in late 2012. The U.S. ESCO industry could grow in size from $6 billion in 2013 to ∼$7.5 billion by 2014, but this growth is contingent on enabling policies. The U.S. ESCO industry is similar in size to the ESCO industries in Germany, France, and China. Our estimation approach could be adapted for other countries with the caveat that ESCO industry definitions and revenue reporting practices vary across countries.