Global ESCO Performance Contracting Market Is Expected to Grow at a Compound Annual Growth Rate of Nearly 10% by 2030
Barriers to market growth include contract complexity, energy price volatility, and limited ESCO capabilities in emerging solutions, among others
A new report from Guidehouse Insights reviews the energy service company (ESCO) market size and projection as annual revenue from long-term contracting models and provides information on regional markets, customer segments and technology types.
ESCO markets have been undergoing significant change in the past years, as the definition is expanding to include more solutions. Although energy savings performance contracting (ESPC) continues to dominate the market, other types of performance contracting are becoming a larger part of the ESCO business. These include EaaS, sustainability and decarbonization advisory, offsite renewable energy procurement, and resilience through onsite distributed energy resources (DER). According to a new report from Guidehouse Insights, the global ESCO performance contracting market—including guaranteed savings performance contracts, shared savings performance contracts, and EaaS—is expected to grow from $18.9 billion in 2021 to $43.2 billion in 2030.
“The ESCO business model and the ESPC financing structure maintains its reputation as a valuable way for global organizations to realize sustainability mandates while meeting operational, financial, and human capital goals,” says Sasha Wedekind, senior research analyst with Guidehouse Insights. “However, most of market growth is anticipated to come from EaaS solutions rather than traditional ESPC models.”
Despite ESCO market changes and a positive forecast, multiple barriers to growth exist. Contract complexity and length, as well as energy price volatility, continue to be a challenge. Additionally, a lack of customer awareness of EaaS solutions is stalling growth. Finally, limited ESCO capabilities in DER, sustainability advisory, renewable energy supply, and other emerging solutions are acting as barriers in the market., according to the report.
The report, Market Data: ESCO Performance Contracting, analyzes the ESCO market size and projection as total revenue generated annually from long-term contracting models with performance guarantees. The report is primarily focused on the North American market but also provides information on how the ESCO business model is developing in Europe and Asia Pacific. This report’s ESCO revenue forecast is split into two segments: guaranteed savings performance contracts and other financing mechanisms (which include shared savings, EaaS, and other contracting tools with performance guarantees). The estimate is additionally segmented by six customer segments and by seven technology types. An executive summary of the report is available for free download on the Guidehouse Insights website.
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*The information contained in this press release concerning the report, Market Data: ESCO Performance Contracting, is a summary and reflects the current expectations of Guidehouse Insights based on market data and trend analysis. Market predictions and expectations are inherently uncertain and actual results may differ materially from those contained in this press release or the report. Please refer to the full report for a complete understanding of the assumptions underlying the report’s conclusions and the methodologies used to create the report. Neither Guidehouse Insights nor Guidehouse undertakes any obligation to update any of the information contained in this press release or the report.