Energy Manage LBNL

Energy Services Industry ‘Could Double’ by 2020

LBNLThe US energy service company (ESCO) industry could more than double in size from $6 billion in 2013 to $11-$15 billion by 2020, according to Lawrence Berkeley National Laboratory.

Aggregate revenue growth rates for US energy service companies significantly outpaced US GDP growth during the three-year period 2009 to 2011, according to Current Size and Remaining Market Potential of the US Energy Service Company Industry.

ESCOs primarily use performance-based contracts to provide energy efficiency, renewable and other energy-related services while guaranteeing that installed equipment, controls and other measures will deliver a specified amount of cost and resource savings to the customer.

Private and public sector ESCO customers have relied on performance-based projects for decades to reduce their operating costs and reap significant energy, water, and other savings, using little or no upfront cash.

For context, this industry typically saves customers each year: the equivalent amount of energy consumed by nearly 2 million households; more than 20 million tons of greenhouse gas emissions; and more than $4 billion in utility bills, Berkeley Lab says.

The research team also estimated the remaining market potential for ESCOs. If ESCOs were able to retrofit the remaining floor space, the investment potential in facilities typically addressed by the ESCO industry ranges from about $71 to $133 billion, according to report co-author Charles Goldman.

The private commercial sector, K-12 schools and healthcare facilities are the markets with the largest remaining investment potential. There is still a significant market for ESCOs working in the government and universities market segments, according to report co-author Donald Gilligan. These sectors accounted for 84 percent of 2011 industry revenue. By contrast, about 8 percent of 2011 ESCO revenues came from private commercial customers.

According to a Pike Research report released in 2012, the US market for industrial energy management software and services will rise from $960 million in 2011 to $5.6 billion by 2020, a compound annual growth rate of 21.6 percent.

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