Increasing demand for onsite distributed energy resources driving growth in ESCO market

A new report by Guidehouse Insights estimates that the market for Energy Service Companies (ESCOs) will grow to nearly $68 billion by 2032, driven by fluctuating energy prices, supply instability, regulatory environments, government incentives and cost-saving opportunities. The report from Guidehouse Insights provides a comprehensive analysis of the energy service companies (ESCO) market globally.
Increasing demand for onsite distributed energy resources driving growth in ESCO market
Courtesy of NREL.

In a rapidly evolving energy landscape, ESCOs have witnessed rapid advances over the past five years, and are now expanding their scope beyond their traditional energy efficiency solutions and guaranteed savings performance contracts. The Guidehouse Insights report finds that the global ESCO performance contracting market, including guaranteed savings, performance contracts, shared savings performance contracts, and energy as a service (EaaS), is expected to grow from $25.9 billion in 2023 to $67.5 billion in 2032 at a compound annual growth rate (CAGR) of 11.2 percent.

“To succeed in today’s energy management landscape, ESCOs need diverse contracting and financial mechanisms to facilitate seamless installations and solutions for their clients” said David Gonzalez, research analyst with Guidehouse Insights. “In the coming decade, the demand for ESCO services is expected to increase globally, driving market expansion, but the ESCO market continues to be confined by issues such as the current shortage of skilled laborers.”

One notable trend driving this transformation is the increasing demand for onsite distributed energy resources (DER) for enhanced resilience. ESCOs recognise the importance of being prepared in the face of unpredictable grid conditions and are actively recommending and incorporating onsite energy generation and storage for their clients. Moreover, ESCOs now provide expert guidance on sustainability practices to assist their clients in achieving their sustainability goals and align with sustainable framework requirements. The concept of EaaS has gained significant traction in the commercial and industrial (C&I) sector and has allowed C&I clients to focus on their core business activities while outsourcing their energy needs, according to the report.

The report, ESCO Performance Contracting, provides a comprehensive analysis of the ESCO market, covering the trends, drivers, and barriers that have shaped its evolution in recent years. It includes a 10-year outlook, offering insights into the ESCO market trajectory over the analysis period. The methodology is based on extensive primary and secondary research. Interviews with a range of market stakeholders were conducted to collect information on market trends and inform assumptions on expected market revenues. A bottom-up and top-down approach was used for the analysis.

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Guidehouse Insights

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