Lawrence Berkeley National Laboratory

The energy service company (ESCO) industry has a well-established track record of delivering energy and economic savings in the public and institutional buildings sector, primarily through the use of performance-based contracts. The ESCO industry often provides (or helps arrange) private sector financing to complete public infrastructure projects with little or no up-front cost to taxpayers. In 2014, total U.S. ESCO industry revenue was estimated at $5.3 billion. ESCOs expect total industry revenue to grow to $7.6 billion in 2017—a 13% annual growth rate from 2015-2017. Researchers at Lawrence Berkeley National Laboratory (LBNL) were asked by the U.S. Department of Energy Federal Energy Management Program (FEMP) to update and expand our estimates of the remaining market potential of the U.S. ESCO industry. We define remaining market potential as the aggregate amount of project investment by ESCOs that is technically possible based on the types of projects that ESCOS have historically implemented in the institutional, commercial, and industrial sectors using ESCO estimates of current market penetration in those sectors. In this analysis, we report U.S. ESCO industry remaining market potential under two scenarios: (1) a base case and (2) a case “unfettered” by market, bureaucratic, and regulatory barriers. We find that there is significant remaining market potential for the U.S. ESCO industry under both the base and unfettered cases. For the base case, we estimate a remaining market potential of $92-$201 billion ($2016). We estimate a remaining market potential of $190-$333 billion for the unfettered case. It is important to note, however, that there is considerable uncertainty surrounding the estimates for both the base and unfettered cases.