ESCOs and Information Technology for New Markets

Abstract

For the foreseeable future demand growth for energy will be gener-
ally higher in developing countries than in the mature markets of devel-
oped nations. Demand growth coupled with inadequate capital re-
sources in these markets has led to projections of shortfalls in electrical
capacity. As subsidies are eliminated in liberalizing economies, energy
prices will rise. These trends have already created a wave of interna -
tional power projects involving independent power producers , global
utilities, local affiliates, financial partners, and privatizing governments.
Those seeking business growth must enter and develop new markets. (1)
The new global utilities will compete for market share on the basis
of ser vices as well as price . In deregulated environments direct market-
ing to major end-users and market segments will be part of the game.
Energ y efficiency (demand-side) resources, because they can be much
less expensive than new supply-side resources, offer a cost enhancement
to capacity but require varied and novel techniques for their decentral-
ized delivery. Financing and technical services may provide non-price
enhancements of critical value to specific customers. Energy procure-
ment and load management play increasingly important roles after de-
regulation.
Energ y Service Companies ("ESCOs") provide a means to identify
customer needs, project opportunities, and enterprise energy solutions.
They assemble services, suppliers, and funds into energy service "prod -
ucts. " They serve as integrators in a relatively complex market and ser-
vice delivery structure (see Figure 1). They are increasingly owned as util-
ity marketing subsidiaries with a mission of getting closer to customers.
New markets across the world do not develop in lock-step. Conse-
quently, a global ESCO will be confronted over time with an on-going
serie s of market entries.