Exploring the Feasibility of ESCO Business in Japan: Demonstration by Experimental Study

Chiharu Murakoshi and Hidetoshi Nakagami, Jyukankyo Research Institute
Tsuyoshi Sumizawa, Shin Nippon Air Technologies Co., Ltd.

Keywords

Abstract

Since 1996, the prospect for a successful and sustainable ESCO (Energy Service Company) industry in Japan has been investigated and its benefits have been promoted. Consequently thirteen companies, including some large ones, have begun ESCO businesses at present and several more have started to find their ways into ESCO business. In October 1999, the Japan Association of Energy Service Companies (JAESCO) was established, with ESCO organizations and utilities as leaders. Meanwhile, the government formulated the Law concerning the Promotion of the Measures to Cope with Global Warming in October 1998, to promote the Energy Efficient Management Program at national and local administrative levels. This program is expected to be the largest market for the ESCO industry.

Preceeding the above, as an auxiliary project of Ministry of International Trade and Industry (MITI), verification of the feasibility and effectiveness of ESCO business has been implemented using 16 walk-through audits and energy savings retrofits of four commercial buildings. Using the MITI project as a demonstration, this paper discusses ESCO business, particularly energy saving technologies, effectiveness, methods for measurement and verification, financing, and model calculations based on contract period and operating performance after retrofit. In conclusion, we discuss the characteristics and feasibility of ESCO business in Japan. ESCO business has just started in Japan, but the possibility of widening the market is significant. This paper confirms the feasibility of ESCO business in Japan.