Understanding recent market trends of the US ESCO industry

Stuart, Elizabeth; Carvallo, Juan Pablo; Larsen, Peter H.; Goldman, Charles A.; Gilligan, Donald

doi:10.1007/s12053-018-9633-9

Cited by 14 publications

(12 citation statements)

References 19 publications

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“…No 'rule of thumb' can be clearly identified for setting the guaranteed savings value [41] although some argue that ESCOs typically set the savings value of the guarantee below predicted performance using ESCO-specific risk tolerances on individual energy conservation measures [42][43][44]. At around 15 terawatt-hours in 2012 electricity savings, the public/institutional sector dominates the 34 terawatt-hour U.S. energy efficiency market [4,45]. This market segment is especially relevant as clients in this sector often finance up to 100% of project costs [35].…”

Section: Conventional Energy Performance Contracting Risk Mitigationmentioning

confidence: 99%

“…Energy efficiency investment is the most cost-effective pathway to reduce carbon dioxide (CO 2 ) emissions [1,2]. Yet, the 2014 $5.3 billion U.S. energy efficiency market can be contrasted against an estimated $92 to $333 billion overall potential [3][4][5]. Nominal revenue stagnation in guaranteed savings contracts for buildings between 2011 and 2014 [4] raises concerns about a seeming incapability to successfully unlock the rest of the market.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Risk Mitigation in Energy Efficiency Retrofit Projects Using Automated Performance Control

Taminiau¹,

Byrne²,

Carretero³

et al. 2021

Sustainable Energy Investment - Technical, Market and Policy Innovations to Address Risk

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Performance gap concerns limit investment in the building energy efficiency retrofit market. In particular, the ability of projects to deliver on promised energy savings is commonly drawn into question. Performance risk mitigation mainly occurs through energy saving performance guarantees. Contractual stipulations arrange the conditions of the guarantee, and ceteris paribus, a higher energy saving guarantee should reduce project performance risk. Therefore, methods that yield a higher energy saving guarantee could help accelerate the market. We review the ability of “smart,” automated, and connected technologies to: (a) intelligently monitor and control the performance of energy-consuming devices to reduce performance variations, (b) provide additional degrees of control over the project’s performance, and, by doing so, (c) motivate the energy services company (ESCO) to raise the energy saving guarantee. Our analysis finds that use of such automated performance control could significantly raise the energy saving guarantee, making projects more likely to succeed.

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Section: Conventional Energy Performance Contracting Risk Mitigationmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Risk Mitigation in Energy Efficiency Retrofit Projects Using Automated Performance Control

Taminiau¹,

Byrne²,

Carretero³

et al. 2021

Sustainable Energy Investment - Technical, Market and Policy Innovations to Address Risk

View full text Add to dashboard Cite

show abstract

“…Energy is an essential requirement for both individuals and companies. Therefore, when the price is high, there is an increase in customer dissatisfaction [25]. Dinçer and Yüksel [26] worked on investments to be made for different renewable energy alternatives.…”

Section: A Literature On Energy Investmentmentioning

confidence: 99%

“…In this framework, D+E is considered to calculate the weights whereas D-E is used to identify impact relation map. The details are given on the equations (25) and (26).…”

Section: Extensions Of Mcdm Modelsmentioning

confidence: 99%

Evaluating Recognitive Balanced Scorecard-Based Quality Improvement Strategies of Energy Investments With the Integrated Hesitant 2-Tuple Interval-Valued Pythagorean Fuzzy Decision-Making Approach to QFD

et al. 2020

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This study aims to identify quality improvement strategies for energy investments. For this purpose, a model is proposed which includes 4 different stages. In the first stage, the MCDM problem is identified for evaluating the service development for energy industry. In this framework, quality function deployment (QFD) approach is taken into consideration which includes both customer expectations and technical requirements at the same time to improve the quality in the organization. The second stage is related to the calculation of the correlation coefficients of decision matrices for the criteria by considering hesitant 2-tuple interval-valued Pythagorean fuzzy sets. The third stage includes the weighting of the customer expectations with hesitant 2-tuple interval-valued Pythagorean fuzzy (HIVPF) DEMATEL. In the final stage, TRIZ-based quality improvement strategies of energy investments are ranked by using 2-tuple HIVPF TOPSIS. Thus, the motivation of this study is to figure out the weights of the criteria for quality improvement strategies in energy investments. Also, the most important contribution of this study to the literature is related to the originality in the methodology by proposing a new MCDM model while using hesitant linguistic term sets, linguistic 2-tuple information, interval-valued Pythagorean fuzzy sets properly. The findings indicate that empathy is the most significant criterion for the customer expectations in the energy investments. In addition to this issue, it is also identified that customization is the best factor among the technical requirements of energy investments. Moreover, information and communication facilities and organizational background are found as the best competencies of new service development in energy investments. Furthermore, that prior action and periodic action are the most prominent strategies for quality improvement. While considering these results, it can be said that the pricing policy of the energy companies should be fair to increase customer satisfaction. Additionally, offering flexible payment opportunities on energy bills can have a positive influence on the customer satisfaction in this process. Also, preliminary planning of the project should be done in detail in energy investments. Owing to this issue, customers' preferences can be identified before the product is placed on the market. In addition, it can be possible to identify the risks that may arise in energy investments with the help of the periodical audits.

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“…The energy service company term is used for companies that develop, install and finance comprehensive, performance-based projects with a 5 to 10-year duration to improve the energy efficiency of facilities owned or operated by a customer (Vine 2005). ESCOs use a business model that offers energy-saving projects as a service (Bertoldi and Boza-Kiss 2017;Stuart et al 2018). In the energy-saving business models, a firm offers making all or a part of the necessary energy efficiency investments for a client in exchange of a service fee and a fraction of the energy cost savings for a predetermined time period.…”

Section: Introductionmentioning

confidence: 99%

Design of balanced energy savings performance contracts

Tan

2019

International Journal of Production Research

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Energy savings performance contracts between the energy users and the energy service companies (ESCO) are used to finance energy efficiency investments by using the future energy savings that will result from these investments. We present an analytical model to characterize the energy savings performance contracts and discuss how the risks of estimating the energy savings affect the energy user and the service provider. This characterization allows determination of the contract parameters for a balanced contract with the information about the energy savings that are expected from the planned energy efficiency investments. Since it is difficult to get the statistical information about the energy savings before investing in an energy efficiency project, we develop a distribution-free contract that sets the guaranteed energy savings level based on the mean and the standard deviation of the energy savings and the profit-sharing ratio between the ESCO and the energy user. We show that a simple distribution-free balanced contract performs satisfactorily when the distribution of the energy savings is not known and its mean and the standard deviation are estimated with error. Our analytical results show that the energy savings contracts with the right parameters can mitigate the risks related to realization of the anticipated energy savings.

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Understanding recent market trends of the US ESCO industry

Cited by 14 publications

References 19 publications

Risk Mitigation in Energy Efficiency Retrofit Projects Using Automated Performance Control

Risk Mitigation in Energy Efficiency Retrofit Projects Using Automated Performance Control

Evaluating Recognitive Balanced Scorecard-Based Quality Improvement Strategies of Energy Investments With the Integrated Hesitant 2-Tuple Interval-Valued Pythagorean Fuzzy Decision-Making Approach to QFD

Design of balanced energy savings performance contracts

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