Developing an ESCO Industry in the European Union

Although the European Commission and the Member States of the European Union (EU)1 have promoted a number of policy initiatives, including legislation, to foster the Energy Services Company (ESCO) industry, a recent survey of ESCO businesses in the EU has indicated that major differences exist in the development of the ESCO business among the various countries. In some countries more than 500 ESCOs have been successfully operating for a number of years, while in other countries only a few ESCOs have recently started to operate. This difference could be explained by several factors, such as: (1) different levels of support offered to ESCOs by national and regional energy authorities, (2) local market structures and rules, and (3) variation in the definitions, roles and activities of “ESCOs”. The results of this survey are used to formulate a long-term strategy to foster the development of ESCOs in Europe. The strategic actions recommended build on successful experiences in Europe and are proposed with an eye to existing and planned legislative measures, such as the proposed Energy Service Directive and the introduction of the Kyoto flexible mechanisms. The strategic actions include accreditation of ESCOs, standardisation of measurement and verification, and easier contracting procedures for ESCO projects (e.g. procurement rules), to trigger the expansion of the ESCO business in the larger EU.