What is an ESCO?

An ESCO is an Energy Service COmpany. Once an energy market is deregulated, these companies have the ability to purchase energy (natural gas or electricity) on the open market for its customers.  This allows them to act as the intermediary between the companies that actually generate the energy, and your local utility company that distributes it to your door.  Deregulation gives the end user the ability to tell their utility company that they want their power from a specific supplier at a specific available rate.

The ESCO's are able to provide a number of competitive options for terms and rates.  These could be a fixed rate over a given period, or a rate that fluctuates with the market on a month to month basis. For the end consumer, nothing else changes with their current utility.  No new power lines, equipment or meters.  The existing utility company continues to service the customer, reads the meter, and maintains any service obligations.

What else can ESCO's do?

Other ESCO's specialize in longer term energy efficiency projects.  These ESCO's design, improve and arrange financing for large scale projects that reduce, manage, and maintain energy costs for a building or facility.  They often offer the following services:

• analyze, design, prepare, and acquire financing for energy efficiency projects;
• supervise the installation, and maintenance of any energy efficient equipment needed for the project;
• Verify energy usage and savings from a given project by measuring and monitoring systems.
• Take on  the risk that a given project will actually save the amount of energy promised.

How Big is the ESCO market?

How Big is the ESCO market?

In 2011, the ESCO market for energy efficiency improvements and installations grew to over $5.1 billion dollars.  The American Recovery and Investment act helped fuel the growth in the ESCO market as President Obama mandated of a 30% energy usage reduction bu all Federal agencies. Growth is expected to outpace the economy, and rech $16 billion in 2020.  The bulk of ESCO projects are conducted for what's called the MUSH market (Municipalities, Universities, Schools, and Hospitals.)