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.


South Africa



	Share of activity
Residential	8
Non-Residential 	30
Transport	2
Industry	60
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	Share of activity
Public	30
Private	70
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	Share of contracts
Energy Performance Contract Shared Saving	20
Energy Performance Contract Guaranteed Saving	80
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Insights


ESCOs in South Africa rely on ESKOM Standard Offer Program.
ESCO accreditation is also conducted by ESKOM.
Average Contract Duration Survey Data

	Share of activity
          Debt borrowed by client 	30
          Debt borrowed by ESCO 	70
        
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There are several policies currently in place that effect the ESCO market in South Africa, including:

In South Africa the average project size is relatively small. Commercial financing is not suited for small projects and large ESCOs have difficulty justifying transaction costs for smaller projects. Without the capability to bundle projects or the creation of financing options for stand alone ESCOs to undertake projects less than $200,000 the ESCO market will struggle to develop. Additionally, there is a perception among lenders of non-standard projects as high risk with a limited capability to estimate energy savings. All energy efficiency projects face this perception of high risk and increased familiarity with the practices of Green Banks would improve understanding of the associated risk profiles.