Recent growth has occurred largely in the so-called MUSH market consisting of municipal and state governments, universities and colleges, K-12 schools, and hospitals. In fact, the report states that in 2011 over 80% of ESCO revenues were derived from this sector. A number of factors have spurred energy efficiency investments in the public sector including limited budgets that have made performance based contracts offered by ESCOs attractive as well as various grants and stimulus funding initiatives such as ARPA.
The report explores in detail remaining market potential as a driver to achieve continued future growth. The largest opportunities are clearly located in the private sector which made up a mere 8% of ESCO revenues in the last 3 years. The potential of this sector has been noted by a number of other reports as well and there is much focus in the industry on addressing various well known hurdles and risk factors that have prevented market penetration to date. The report also concludes that future earnings will be influenced by energy, water, and possibly emissions pricing; policies that allow public/institutional customers to address non-energy, deferred maintenance issues with performance-based contracts; and the ability of ESCOs to partner with utility customer-funded program administrators and state regulators to meet aggressive energy related mandates.
The full report can be downloaded here.