How are EU ESCOs behaving and how to create a real ESCO market?

Panel: Panel 5. Market-based instruments

Authors:
Paolo Bertoldi, European Commission
Vincent Berrutto, European Commission
Mario de Renzio, Federazione Italiana per l’uso Razionale dell’Energia
Jerome Adnot, Ecole des Mines
Edward Vine, Lawrence Berkeley National Laboratory

Abstract

The European Energy Service Companies’ (ESCOs) market has been estimated to be 150 million Euro per annum in 2000, while the market potential has been estimated to be 5 to 10 billion Euro per annum. This indicates that there is a great potential to increase the ESCOs’ activities in the European Union (EU). Moreover there is a big difference in ESCOs’ activities among EU Member States.

The Commission has promoted a number of policy initiatives to foster the development of the ESCO industry, including a specific article in the SAVE Directive (1993/76) and a model contract for Third Party Financing (TPF). Recently through the GreenLight Programme, the Commission has established the first European list of ESCOs. From the listed ESCOs it emerges that the definitions, roles and activities of “ESCOs” vary a lot, and only a limited number of ESCOs have the capability and willingness to finance the energy efficiency projects and receive payments exclusively from the resulting cost savings.

To establish a “real” ESCO market, the European Commission is planning to take a number of actions, including the following:

introduce a clear and unique definition of ESCO at the EU level;
establish a EU Code of Conduct for ESCOs in order to develop an EU wide accreditation of ESCOs;
establish a EU list of accredited ESCOs,
establish the European Energy Service Company Association (EAESCO); and
propose a Directive on Energy Services.

This paper describes the present ESCO market and recent developments in the EU, analyses the key barriers to ESCO activities, and describes how the above mentioned action plan will help to develop an ESCO market in the EU.