Organizational Strategies For Global ESCOs

Abstract

Deregulation of the utility industry is changing companies once
limited to protected local service into global competitors. Independent
"ESCOs" (energy service companies), which provide energy efficiency
programs and performance contracting, are being integrated to offer
"customer value" and "business solutions" in the new battles for market
share. But these battles do not change the fact that energy markets are
mature in the US and other developed countries. Growth in energy de-
mand is to be found primarily in developing countries. Competition will
therefore be inexorably drawn to global markets.
Power pla yers ha ve been entering developing markets primarily
by participation in generating assets , either as a state-o wned sector is
pri vatized or as new plant is contracted. As these markets mature into
increasing competition, energy ser vices will again emerge as part of
customer strategy: seeking direct relationships with de sirable customers
and creatin g ne w, on-site sources of re venue . Need for new capital
equipment will drive interest in programs which pro vide plant im-
pro vements, especially if capital costs can be reduced by innovative
financing. With the availability of incentives for climate change abate-
ment, the joint implementation of energy efficiency can be a leading
edge of capital investment intended to establish long-term customer re-
lations.