Analysis of ESCO Activities Using Country Indicators

Abstract

Energy Service Companies (ESCOs) are private sector instruments that offer energy-/emission-improvement (energy saving, energy efficiency, energy conservation, emission reduction) projects in the developed and in some developing countries. Literature reveals that energy-/emission-improvements of countries may be related to their innovation-and R&D-activity levels. In this work, we use a literature data on the activities and the sectors targeted by ESCOs in 38 countries, summarized in terms of the age of ESCO market (AEM), number of ESCO companies (NE), and total value of ESCO projects (VE). Along with the Global Innovation Index (GII) data of the countries, we investigate the relationships among the ESCO Indicators (EIs: AEM, NE, VE, sectors targeted by ESCOs), and the Country Indicators (CIs: GII and per-capita GDP, energy consumption, CO2 emission). We observe noteworthy dependencies between the EIs and CIs. Using the simple trend equations we estimate the missing VEs in the original data. We also project, as a hint for the size and orientation of the upcoming Turkish ESCO market, the set of EIs and the distribution of the sectors that are likely to be targeted by ESCOs in Turkey. Keywords:Energy service companies; ESCO; Global Innovation Index; GDP; Energy consumption; Greenhouse-gas (CO2) emission; R&D.Munich Personal RePEc Archive Edition. Reproduction & distribution subject to approval of the corresponding author or the copyright owner. If you are going to cite this work please contact the corresponding author to learn its current status. Analysis of ESCO Activities MotivationESCOs, as private-sector instruments, guarantee and deliver energy improvements (saving, efficiency, conservation) to their clients. An ESCO's remuneration is tied to the energy improvement actually achieved. ESCOs may finance, or assist in financing, an energy project by providing improvement guarantee.Behind our motivation for the analysis of ESCO activities, innovations, energy consumptions, emissions, and GDPs of countries there are two important and implicitlyrelated recent laws of Turkey.Turkey's Energy Efficiency Law (EEL) was enacted in 2007, partially as a result of Turkey's tasks of complying with the European Union (EU) directives. Turkey's EEL aims to end the state monopoly by allowing private-sector participation and competition under independent regulation. One important facet of the EEL was the establishment of an ESCO market, which is currently the hot issue in the Turkish energy market.Turkey's recent law "Law About the Support of R&D Activities" (RDL in short) supports generation of technological know-how to make the economy internationally competitive through R&D and innovation. RDL exploits innovations in developing technology-intensive products and production processes, improving efficiency and costs, and commercializing technological know-how.Turkey's energy policy had been very much supply-oriented in the past. Reflecting this policy, Turkish manufacturing sectors had not been very energy efficient, and...

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