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Climate Business

Climate Business > Sectors  > Green Buildings 

IFC partners with energy service companies (ESCOs) as a platform to deliver energy efficiency solutions for environmentally-friendly buildings.  ESCOs share the benefits of their conservation measures with customers through performance-based contracts that guarantee savings.

Green Buildings: Energy Services Companies

 

Building Owners

Property Developers

Manufacturers & Suppliers

Energy Services Companies

Financial Institutions

Governments

 

IFC partners with energy service companies (ESCOs) as a platform to deliver energy efficiency solutions for environmentally-friendly buildings. ESCOs share the benefits of their conservation measures with customers through performance-based contracts that guarantee savings.

 

ESCOs make sense in every marketplace, but are particularly effective in countries with high-energy tariffs and/or low energy productivity. They are most impactful with the following types of buildings:

 

  • 24-Hour Use Buildings
  • Owner-Occupied Buildings
  • Retail and Hotel Chains

 

 

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By engaging with ESCOs to increase their capacity in emerging markets, IFC helps to eliminate such obstacles as uncertainty over technology, access to finance, perceived risk, time constraints, and a lack of awareness of the business case. IFC supports the ESCO industry by:

 

  • Encouraging joint ventures between multi-national and domestic ESCOs
  • Financing support structures and funding mechanisms
  • Fostering domestic financial institution support
  • Promoting geographic, technological, or industrial bundling
  • Considering innovative ESCO models

 

IFC works with partner financial institutions to issue guarantees in commercial loans for energy efficiency transactions. IFC’s investment in risk-sharing facilities supports local currency loans for energy efficiency companies and equipment vendors, so that these critical local market players can obtain access to finance. These programs often involve an intermediary such as an energy service company, and can be implemented through public-private partnerships.

 

While ESCO business models differ in their approach to design, implementation, and ownership, the savings generated are consistent (ranging between 15-35%). These savings are often applied to capital costs during the payback period, to support the “greening” of both new and retrofitted buildings.

 

See more examples of ESCO programs on our Utility Efficiency pages. 

 

Project example: 

 

  • Optima Energia is an energy service company in Mexico that enters into performance-based contracts with hotels to improve energy efficiencies. The resulting savings in energy costs pay back Optima’s capital investment, with future savings split between Optima and the hotel customer. IFC’s loan will allow Optima to engage with more hotel customers, who can improve their financial performance while reducing their contribution to climate change.

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