Local Governments Turn to Energy Saving Industry

HEAVILY strained governmental budgets have convinced state and local governments across the United States to adopt a new form of performance-based investments in energy efficiency offered by ESCOs.

An ESCO, and energy services company, provides energy-efficiency-related and other value-added services often with performance contracting as a core part of its energy-efficiency services business.

State and local governments are also scrambling to find solutions to energy efficiency problems and rising energy costs. These challenges have bolstered business for ESCOs that offer performance contracting and other methods to improve efficiency and achieve substantial savings on energy costs.

Additionally, the U.S. Federal stimulus package, including the American Recovery and Reinvestment Act (ARRA) funding, has provided much needed money to go toward these energy efficiency projects and has resulted in a large projection of growth for the energy saving industry for 2011, totalling over $34.7 billion in the States.

Verify Markets has just released a study on Energy Management Services. The market, including Energy ESCOs, totaled over $32.9 billion in 2010, a 1.6 percent increase from the previous year. The study also projects that the total market will approach $50 billion by 2017 due to an increasing need for energy efficiency and sustainability and staving off increasing energy prices.

"Various grant and stimulus money such as ARRA funding has provided billions of dollars for MUSH (municipalities, universities, schools, hospitals) markets that are implementing energy efficiency projects," says Verify Markets Analyst Anthony Miller.

"Also, these end-users are becoming more and more aware of the need for more efficiency and are now realizing that it's not only necessary in terms of sustainability, but that it saves substantially on energy bills."

Overcoming financial uncertainty due to the slow economic recovery has been a significant challenge for the industry. The commercial and industrial (C&I) sector has decreased considerably in terms of energy management revenue because of the economic climate.

Energy management firms often lack the ability to provide financing to customers and implementing energy efficient equipment, in many cases requires a sizable initial investment. End-users that endured the economic recession are hesitant to commit to a long term financial strain while still incurring repercussions of the market.

Thursday 13th January 2011

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