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Energy Service Companies
At the heart of innovative financing models for efficiency
Energy service companies (ESCOs) deliver energy efficiency projects that are financed based on energy savings. Given the need to rapidly and significantly increase financing for energy efficiency, interest in ESCO business models is growing.
France has a well developed ESCO market that relies heavily on energy service contracts. Nearly 350 ESCOs operate in France, while only 10 of those ESCOs offer guaranteed agreements (JRC 2016). French ESCOs are typically large international and national companies, which carry out these services in addition to other activities such as facility management, energy production and equipment installation.
One reason for the success of the French market is the standardisation of contracts throughout the entire procurement process. The down-side is lack of flexibility. The up-side is the reliable and accountable service and compensation for the client.
Chauffage contracts cover the majority of ESCO activity in France and have been used for 60+ years. This contract allows the ESCO to operate and maintain the client's equipment and sell the output (heating, cooling, lighting, etc.) to the client at an agreed price.
There are four main standardised chauffage contracts:
P1 contracts cover the supply of energy or fuel without an explicit obligation for energy savings and guarantees
P2 contracts cover operation and minor maintenance services
P3 contracts cover full maintenance, including major repairs and supply of materials
P4 contracts cover major renovation and purchase of new equipment
Average duration of ESCO projects in France is 8 years which is the typical time horizon for equipment amortization.
These laws encourage energy performance diagnostics/audits, energy performance contracts and other interrelated services.
The QualitEE survey has collected data surrounding the main drivers and barriers of business for ESCOs in France. This is an excellent opportunity to compare the structural differences of ESCO markets to identify policies or mechanisms that account for such variance. Policies can then be built to complement existing drivers and overcome identified barriers.