Development of Energy Service Company (ESCO) Market to Promote Energy Efficiency Programmes in Developing Countries

Abstract

Around 80% of the world’s economic growth projected from 2004 to 2030 will be contributed by non-OECD (Ellis, Energy service companies in developing countries: Potential and practice. International Institute for Sustainable Development (IISD, 2009).); energy service companies (ESCOs) can play a vital role in improving energy efficiency in developing countries. ESCO can help energy users, customers, companies, industries and commercial sectors to improve an efficiency of equipment by providing energy service (energy performance and/or credit risk). ESCO was implemented quite successfully to promote energy efficiency (EE) in majority of the European Union (EU) and developed countries such as the USA, Canada and Japan but not in many developing countries. This raised the question, what are the potential barriers of using ESCO for EE programmes in developing countries? It is, therefore, crucial to understand the ESCO approach in different countries to find lessons learned and best practices. The policy for implementing ESCO varied in different countries depends on many factors such as the culture, the acceptance of EE and also the level of EE development. Although the same policy of ESCO can be implemented in several countries, the result could be different. This research will provide a comprehensive overview of the success and barriers to implementing ESCO programmes for energy efficiency in the developing countries. The lessons learned from this will summarize with the recommendation to develop ESCO implementation in developing countries.