CHUEE Scales Up Support for China’s Energy Services Industry
Energy service companies (ESCOs) function as non-banking financial institutions that arrange energy efficiency financing and technological solutions for companies, to help them use less energy and save money. ESCOs have the unique advantage of combining technical and financial services (including guarantees) to catalyze new energy efficiency investments, particularly among industrial and commercial customers.
China is one of the world’s strongest ESCO markets, with an estimated $150 billion worth of feasible ESCO-led energy efficiency projects in the pipeline. Despite the rapid growth in the market, the ESCO sector faces constraints that prevent it from achieving scale and from making a significant impact in reducing greenhouse-gas emissions. For instance, projects by ESCOs in China are estimated to have reduced only a mere 0.1 percent of the country’s greenhouse gas emissions in 2010.
IFC seeks to assist China’s energy services sector to contribute to the country’s medium-term energy and carbon-intensity reduction targets. As such, CHUEE has recently launched a study of China’s ESCO market enabling IFC and its CHUEE partner banks to extend financing in the sector.
The market study aims to:
(a) gain a deeper understanding of existing ESCO players in the Chinese market
(b) estimate market growth, developmental impact potential, and financing gaps among ESCOs
(c) identify opportunities to forge partnerships between selected ESCOs and CHUEE partner financial institutions; and,
(d) identify potential market barriers and creating solutions to remove them in the short term.
IFC is in the process of hiring a consulting firm, and the study is expected be completed by September 2012.