UK Local Authority engagement with the Energy Service Company (ESCo) model: Key characteristics, benefits, limitations and considerations

• Some UK Local Authorities (LAs) have engaged with Energy Service Company (ESCo).
• Driven by a desire to shape local energy system to deliver on their objectives.
• LA may establish an ‘arm's length’ ESCo or partner with a private or community ESCo.
• Trade-off between strategic control over energy system change and exposure to risk.
• LA can bolster ESCo business case but ultimately depends on central government.

This paper explores how some UK Local Authorities (LAs) have opted to engage with the Energy Service Company (ESCo) model in a bid to enhance their influence over local energy system change and help them to deliver on their political ‘public good’ objectives. Three common approaches to LA ESCo model engagement are outlined including the: (1) LA owned ‘arm's-length’ model; (2) private sector owned concession agreement model; and (3) community owned and run model. The LA's decision to establish its own ESCo, or alternatively enter into a partnership with another, predominantly depends on: its willingness to expose itself to risk, the level of strategic control it desires and the resources it has at its disposal. However, the business case is contingent on the extent to which the national policy and regulatory framework facilitates and obligates LAs to play an active energy governance role. Stronger alignment of local and national energy agendas through communication and coordination between different governance actors could help to remove critical barriers to LA ESCo engagement and their wider energy governance activities.