A new report from Navigant Research looks at the maturing market for energy services and proposes that U.S. energy service companies (ESCOs) face a challenge in finding new ways to grow and must look beyond U.S. markets.
“The energy service company (ESCO) industry in the United States follows a modest revenue growth trajectory generated by the business of implementing comprehensive facility upgrades. There is a foundation of ESCO work in the public sector that is supported by policy and economic drivers. The challenge for industry, however, is to attain more aggressive growth in this mature marketplace. Long-term market expansion is expected to arise from new business in the private sector and through the development of opportunities in markets outside of the United States.”
The researchers expect Europe to be the first key international market for the largest U.S. ESCOs. Although ESCOs have faced obstacles in developing markets outside the United States, the report says, “a tipping point is nearing and momentum is expected in the mid- and long-term.” According to Navigant Research, the U.S. ESCO market is expected grow from $6.3 billion in 2015 to $11.5 billion in 2024, while ESCO revenue in Europe is projected to grow from $2.7 billion to $3.1 billion.
This Navigant report assesses the ESCO market for energy performance contracts (EPCs). These projects include retrofits for lighting, heating, ventilation, and air conditioning (HVAC) and mechanical systems, renewables, water conservation, commercial building automation systems (CBASs), and building energy management systems (BEMSs). The report details the current state of the ESCO market and provides insight into its future direction based on customer demand, government policies, and other market dynamics.