Russia’s Emerging ESCO Market: Prospects and Barriers for Energy Efficiency Investments
FCN Working Paper No. 6/2012
50 Pages Posted: 27 Jul 2012 Last revised: 11 Dec 2013
Date Written: September 2012
The Russian Energy Service Company (ESCO) market emerges rapidly due to the new energy efficiency legislation that has been implemented since 2009. However, a clear identification of the Russian ESCOs, comparable to those operating in the Western markets, remains rather difficult. Hence, aside from the independent ESCOs identified, further energy service-providing companies were within the scope of this survey. This paper delivers, to the best of our knowledge, the first systematic empirical investigation of the Russian ESCO industry, taking into account experiences from the international ESCO markets. Building on the insights gained from reviewing the existing international and Russian academic and non-academic literature on the ESCO concept, an explorative, questionnaire-based survey among 161 Russian energy companies and organizations was conducted. Twenty eight usable responses were returned, corresponding to a response rate of 17%. Our findings show that the new energy efficiency legislation addresses and supports the state sector. There are almost no state measures supporting the commercial ESCO sector. Most of the projects are financed either through ESCOs’ own funds and direct loans to customers, or by the customers themselves. In contrast, Russian banks rarely provide direct loan financing for energy efficiency projects of ESCOs, but rather offer financial leasing contracts. The contractual form “guaranteed savings”, which is generally more applicable in mature ESCO markets, is gaining in importance, while “shared savings” is barely used.
Keywords: Energy Efficiency, Financing, Energy Service Company, ESCO, Energy Performance Contracting, EPC, Energy Service Providing Company, ESPC
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