Energy Saving and Performance Contracting Market Trends and Forecast Nov 2016 | Page 2

REPORT DESCRIPTION

Energy saving and performance contracting (ESPC) is a type of financing for capital improvement in order to fund energy
upgrades from the resultant cost reductions. In ESPC, an external Energy Saving Company (ESCO) implements a project to
deliver energy efficiency and repay the costs of the project, which also includes the costs of the investment. In some
cases, the ESCO implements a renewable energy project and the revenue from the cost savings is used to reimburse the
cost of the project. Unless the project delivers energy savings as predicted, the ESCO does not receive its compensation.
Oil & gas restructuring is anticipated to drive market
Restructuring and liberalization of electricity and gas markets is expected to be the major driver for the energy saving
and performance contracting market. The measures undertaken by private and public sector industries to mitigate
climate change is another driver for the market. Lack of information related to energy efficiency and understanding of
opportunities it offers is a restraint to the market. Lack of commercially sustainable and viable project financing within the
banking sector due to their limited experience also restraints the market.
Energy Saving and Performance Contracting Market: Segmentation
The energy saving and performance contracting market can be segmented based on technology as:
•

Combined Heat and Power (CHP), District heating (DH) refurbishment, and fuel switch

•

Heating, Ventilation, Air Conditioning (HVAC)

•

Renewable Energy Sources (RES) utilization

•

Lighting (indoor and street lighting)

•

Others (gas distribution, compressed air, reactive power, process unit, and combustion improvement)

The combined heat and power segment has major share followed by the lighting segment.
The energy saving and performance contracting market can be segmented based on business contract
models as: