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.


Mexico



	Share of activity
Residential	0
Non-Residential 	30
Transport	0
Industry	70
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	Share of activity
Public	20
Private	80
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Insights

There is a North-South distribution of ESCOs across Mexico. Northern Mexico's ESCO industry is more developed in terms of number and complexity of projects completed than Southern Mexico.

Energy prices are a key influencing factor to the success of ESCOs. The higher the price of electricity the more projects ESCOs typically complete.

Average duration of ESCO projects in Mexico

Within Industry the typical project length is four to five years and increasing as the ESCOs develop and are able to undertake larger projects.

Examples of larger projects regularly occur within the Municipal and Co-generation segment. Project length for Municipal and Co-generation segment is an average of 10.5 years.

Survey Data

Primarily projects are financed via debt borrowed by the client and ESCOs. The typical project size ranges from USD 100,000 to USD 5 million. This range causes financing difficulty. Projects are too large for micro-financing yet too small to cover typical transaction costs. Small projects, less than 1 million USD, usually use pay for services agreements and account for less than 10% of all projects completed in Mexico.

Policies exist but are not mandatory