Institutional investors are showing renewed interest in energy efficiency, as energy management has emerged as an immediately scaleable option to counter the energy crisis. This situation has increased investment opportunities exponentially, especially for venture capitalists, in energy service companies (ESCOs).
New analysis from Frost & Sullivan (financialservices.frost.com), North American Energy Management Services - Investment Analysis, reveals that the energy management services market in North America earned revenues of $20.35 billion in 2008 and estimates this to double by 2013 due to favorable government legislations and increasing awareness about the benefits of energy management.
If you are interested in a virtual brochure, which provides manufacturers, end-users, and other industry participants with an overview of the investment options in North America's energy management services, then send an email to Johanna Haynes, Corporate Communications, at johanna.haynes[.]frost.com, with your full name, company name, title, telephone number, company email address, company website, city, state and country. Upon receipt of the above information, an overview will be sent to you by email.
"The incorporation of the 'Go-Green' factor in every corporate and socio-political agenda has also generated immense interest in energy management services," says Frost & Sullivan Research Analyst Sivapriya Ramakrishnan. "Adoption levels in the earlier conservative commercial and industrial (C&I) segment is increasing rapidly."
Both the federal and state governments are wooing energy management investors through rollouts of financial incentives in the form of tax credits and rebates. Most of the supporting regulations are in the high energy consuming states of California, New York, Massachusetts, and Texas.
Although these efforts have gone a long way in nurturing investments in energy management services, the long payback period of eight to even twenty years deter potential investors. Moreover, the lack of quantifiable benefits of employing energy conservation measures discourages significant investment in energy management.
To make the energy savings contracts more appealing to investors, the market adopted the performance contracting model, which has played a pivotal role in increasing the adoption levels of energy management. As there is no upfront investment from the customer and repayment can be made from the savings generated, the long payback period will cease to be a burden on end- users of the service.
"Energy savings performance contracts (ESPCs) went through a rough phase in 2003, when the federal energy savings performance contract legislation of the Energy Policy Act disallowed the federal government to use private financing for energy efficiency measures," notes Ramakrishnan. "ESPCs resurfaced when the mandate was reauthorized a year later and regained its popularity."
ESPCs, as a mode of financing energy management projects, have encouraged venture capital and private equity investment as they resort to the third parties (financial institutions) to finance the contracts. The popularity of ESPCs is evident by its large-scale adoption -- particularly in the federal, institutional, and C&I segments.
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North American Energy Management Services - Investment Analysis