Energy Service Company

An energy service company (acronym: ESCO or ESCo) is a commercial business providing a broad range of comprehensive energy solutions including designs and implementation of energy savings projects, energy conservation, energy infrastructure outsourcing, power generation and energy supply, and risk management. A newer breed of ESCO evolving in the UK now focuses more on innovative financing methods. These include off-balance sheet vehicles which own a range of applicable equipment configured in such a way as to reduce the holistic energy cost of a building. The building occupants, or landlord, then benefit from the energy savings and pay a fee to the ESCO SPV in return. At all times, the benefit (saving) is guaranteed to exceed the fee. In all instances, The ESCO starts by performing an in-depth analysis of the property, sometimes at risk, designs an energy efficient solution, installs the required elements, and maintains the system to ensure energy savings during the payback period. The savings in energy costs are often used to pay back the capital investment of the project over a five- to twenty-year period, or reinvested into the building to allow for capital upgrades that may otherwise be unfeasible. If the project does not provide returns on the investment, the ESCO is often responsible to pay the difference.