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.


Germany


The following information is derived from both QualitEE's energy efficiency service's analysis and the JRC's 2017 report, Energy Service Companies in the EU


	Share of activity
Public	75
Private	25
{
        "chart": {
          "type": "pie"
        },
        "title": {
          "text": "Energy Service Companies Activity: Public vs. Private Sector "
        },
        "plotOptions": {
          "series": {
            "innerSize": "50%",
            "size": "100%",
            "tooltip": {
              "valueSuffix": "%",
              "valueDecimals": 0
            },
            "dataLabels": {
            	"enabled": false
            },
            "showInLegend": true
          }
        },
        "legend": {
          "layout": "horizontal",
          "x": 0,
          "floating": true,
          "y": 30 
        },
        "credits": { 
          "enabled": false
        },
        "exporting": {
          "chartOptions": {
            "title": {
              "text": "Energy Service Companies Activity in Public vs. Private Sector"
            },
            "subtitle": {
              "text": "Germany"
            }
          }
        }
    }

	Share of contracts
Energy Supply Contract 	86
Energy Performance Contract	14
{
        "chart": {
          "type": "pie"
        },
        "title": {
          "text": " Energy Service Companies Contract Type "
        },
        "plotOptions": {
          "series": {
            "innerSize": "50%",
            "size": "100%",
            "tooltip": {
              "valueSuffix": "%",
              "valueDecimals": 0
            },
            "dataLabels": {
            	"enabled": false
            },
            "showInLegend": true
          }
        },
        "legend": {
          "layout": "horizontal",
          "x": 0,
          "floating": true,
          "y": 30 
        },
        "exporting": {
          "chartOptions": {
            "title": {
              "text": "Energy Service Companies Contract Type"
            },
            "subtitle": {
              "text": "Germany"
            }
          }
        }
    }

Insights

The German market is one of the most established and successful in the EU. However, a huge portion of this market (around 86%) is based on energy supply contracting. As is relatively common in the region, the majority of EPC projects occur in the public sector.

Average duration of ESCO projects in Germany is 5-10 years. QualitEE Data

In most cases, ESCOs in Germany are responsible for financing EPC related projects. ESCOs typically use their own funds or loans. Sale of claims is generally accepted and a main collateral in EPC projects – about 60% of respondents confirmed that in the majority of their projects such arrangements are accepted. A claim is a legal demand or assertion by a claimant for compensation, payment, or reimbursement for a loss under a contract, or an injury due to negligence.

QualitEE Data

Law EDL-G (Gesetz über Energiedienstleistungen und andere Energieeffizienzmaßnahmen (EDL-G) provides structure for the ESCO industry in Germany.

The German Energy Agency (dena) and other local energy agencies such as the Berlin Energy Agency (BEA) promote energy efficiency services in the framework of national and European programmes and initiatives. For example, the BEA conducts the German aspect of the European Energy Service Initiative Towards the EU 2020 Energy Saving Targets (EESI 2020). Through seminars, training programmes and workshop for the promotion of energy services these organisations help overcome non-technological barriers for the ESCO industry such as the lack of systematic information, trust, procurement procedures, know-how or the lack of market facilitators.

The QualitEE project surveyed companies to identify the main drivers of business for ESCOs in Germany. Policies can be built to complement existing drivers. Additionally, this is an excellent opportunity to compare the main drivers of business with those of other countries to identify policies or mechanisms that account for the driver differential.

QualitEE Data

The QualitEE project surveyed companies to identify the main barriers of business for ESCOs in Germany. By identifying barriers to ESCO activity new strategies can be developed to help the market mature. For example, 86% of German respondents in 2015 cited lack of information or complexity of concept as a barrier for ESCO market development. Through the actions of the national and regional energy agencies and ESCO associations this is a barrier that has progressively decreased over the years. This can be seen by the 19% decrease in the number of respondents citing complexity/lack of information as a main barrier in 2017.

QualitEE Data