ABSTRACT
In mature markets, Energy service companies (ESCOs) have become sophisticated energy efficiency project developers responsible for an unusually wide spectrum of tasks. ESCOs distinguish working capital from project financing. The energy performance contracting (EPC) model benefits energy end-users by reducing technology risks they would otherwise incur if they did it themselves. The ESCO provides engineering-based savings projections and financial pro-forma estimates (the majority of which they are willing to guarantee). ESCOs affiliated with an equipment manufacturing firm may supply equipment from competing companies. In developed markets, the attraction of EPC has been where an ESCO might provide a performance guarantee. While over 90 percent of the EPC agreements in North America are currently structured for guaranteed savings, chauffage is an increasingly popular model in Europe. ESCOs are usually successful in arranging long-term project financing, which can be a non-recourse arrangement to them by assigning contract rights to lenders.
