What is an ESCO
March 10, 2010 by Energetics
Energy Service Company or ESCO
Simply put, an ESCO (Energy Service Company) is a business that finances projects designed to improve the energy efficiency and maintenance costs for other companies. In general, ESCO’s act as project developers and oversee a wide range of tasks including:
- Arranging financing for energy efficient projects.
- Installing and maintaining the energy efficient equipment involved in the project.
- Measuring, monitoring and confirming that the project is actually saving money.
- Guaranteeing that the project will save the amount of money it is supposed to save.
The ESCO uses a wide range of cost-effective measures to achieve energy savings. These measures often include the use of high efficiency lighting, high efficiency heating and air conditioning and centralized systems to manage energy.
What makes ESCOs different from other companies that offer energy efficiency is the concept of performance-based contracting. When an ESCO takes on a project the company’s compensation and often the financing of the project is directly linked to the amount of energy that is actually saved.
Another very important part of energy efficiency projects is the education of the customer about their own energy use so they understand the patterns they have developed regarding how they utilize energy. This is important because the ESCO wants to develop a healthy relationship with their customers.
In addition to the financial benefits realized by ESCO customers through energy and maintenance cost savings, this growing industry has had a profound impact on the U.S. economy. New jobs have been created, within the ESCOs and through the use of independent contractors. The future for ESCOS and their customers is bright and there is an increasing global need to take advantage of and utilize energy efficiency projects on a widespread and global scale.