Established more than 30 years ago, the Energy Service Company (ESCO) business has proven to be a highly effective model for improving energy efficiency in commercial and public buildings. Several major categories of industry players are currently competing within the market: building equipment manufacturers, utility-affiliated ESCOs, architectural and engineering companies, and independent ESCOs.
However, according to a recent report from Pike Research, the ESCO industry is now in the midst of a transformative period, the outcome of which will be a dramatically different competitive arena. The cleantech market intelligence firm expects that, following this period of change, building equipment manufacturers will emerge as the most significant winners of the market share battle. A few such players include Honeywell, Johnson Controls, and Carrier/NORESCO.
ESCO industry consolidation over the past several years has reshaped the competitive landscape,” says research analyst Jevan Fox. “With federal energy service performance contracts in particular, a smaller number of players represent an increasingly larger portion of the total market. This leadership position will be critically important as ESCOs expand their presence beyond the institutional and federal sectors, and into the private commercial building market.”
Pike Research forecasts that the United States ESCO market will more than triple in size in the next 10 years, increasing from $5.6 billion annually in 2009 to approximately $19.9 billion by 2020. This growth will be driven in part by the expansion of ESCO offerings to encompass a broader suite of energy-efficient services and products, including a greater focus on renewable energy, demand side management, and high-efficiency lighting.
Pike Research’s study, “The U.S. Energy Service Company Market”, examines the commercial buildings market by end-use, identifying the solution opportunities for ESCOs and highlighting key industry drivers. The report analyzes the framework for rapid growth in this market, with forecasts that include base case and aggressive growth scenarios through 2020. An Executive Summary of the report is available for free download on the firm’s website.