Survey Report about ESCOs

Energy Service Companies and Their Main Challenges and Priorities in 2024

You have probably seen that we have already shared the results of our State of Energy Management 2023 survey. How exciting! So the report is now available for free download.

Just like in previous editions, our attention in this year’s survey was directed towards Energy Service Companies (ESCOs), exploring the obstacles encountered in 2023, their focal points for 2024, and the anticipated trends shaping the energy sector in the years ahead.

This article delves deeper into the survey outcomes.

Report on the Energy Management Survey 2024 - Spacewell Energy

The energy crisis has prompted ESCOs to adapt their models in order to stay competitive. In an industry that is continuously evolving due to fluctuating prices, digitalisation processes, as well as shifting regulations and normatives, challenges and opportunities are emerging rapidly. Consequently, the trajectory of the energy efficiency sector will largely depend on the impact of ESCOs’ business models in the market. The British Government’s commitment to achieving net zero carbon emissions by 2050, in accordance with the Paris Agreement, underscores the pivotal role ESCOs play in advancing this objective through conservation efforts and enhancing energy efficiency.

The State of Energy Management Survey: Respondents’ profiles

According to the State of Energy Management survey, out of the 200+ participants, 71% were employed in companies directly involved in the energy sector, such as Energy Service Companies (ESCOs), utilities, equipment manufacturers, and renewable energy firms. Notably, over a third (38.6%) of the respondents were affiliated with Energy Service Companies. ESCOs represent a critical segment in the collective endeavour to achieve energy efficiency objectives and foster a more sustainable energy consumption approach.

35.3% of the respondents from ESCOs indicated that they identify their professional roles primarily as Energy Managers, while another significant portion (23.52%) identified themselves as Business Development Managers.

ESCOs’ top Energy Management Challenges

Total respondents of the Energy Survey

The 2023 Energy Survey has illuminated the main obstacles confronting organizations in the domain of energy management. Upon examining the challenges encountered by Energy Service Companies (ESCOs), it becomes evident that these entities are at the forefront of addressing and overcoming issues crucial to the advancement of sustainability and energy efficiency.

Generating and Maintaining Verified Savings (28.60%)

In 2023, 28.60% of ESCOs acknowledged that their primary challenge was generating and sustaining verified savings. This underscores the industry’s overarching emphasis on not only cutting energy usage but also guaranteeing quantifiable and enduring decreases. The validation of savings plays a pivotal role in building credibility with clients and stakeholders, demonstrating the efficacy of energy management tactics.

By continuously monitoring and maintaining implemented measures and staying updated on industry standards and best practices in energy efficiency, ESCOs will attain energy savings. Furthermore, companies must undergo periodic audits to verify that energy savings persist.

Analysing existing projects, verifying, and forecasting savings during the project planning phase can pose significant challenges without the appropriate technology. This is precisely why the most advanced ESCOs have already adopted and acknowledged the importance of an Energy Management System (EMS). Our survey reveals that more than half (58.82%) of ESCOS surveyed are already leveraging an EMS to simplify and optimise their operations.

Measurement & Verification (M&V) processes are employed to systematically measure and authenticate the energy savings achieved through planned and defined alterations to all or segments of the energy infrastructure within a particular facility or group of facilities, adhering to regulatory standards.

To implement any energy savings project, Energy Performance Contracts (EPC) must establish the framework for calculating and allocating the savings achieved by both the ESCO and the customer.

Our Spacewell Energy Measure and Verification tool could prove advantageous for your company, as it will enable you to:

  1. Increase the Evaluation Frequency of your Project
  2. Visualise Savings vs.Targets
  3. Evaluate multi-location contracts

Implementing these measures to measure and verify savings throughout your energy efficiency project represents advanced steps that can accelerate decision-making and adjustments throughout the project duration.

If you want more information, you can read our article titled “How to increase your EPC Margins using Dexma Measurement and Verification Tool”.

Identifying the Right Technologies for their Needs (19%)

As mentioned previously, ESCOs strive for verified savings. In doing so, they often face the intricate challenge of identifying technologies that align with their specific needs.

This obstacle, highlighted by 19% of survey participants, emphasises the significance of keeping up with technological progress and incorporating solutions that are not only innovative but also practical.

Increase operational efficiency in energy management projects (14.30%)

Another noteworthy challenge involves the pursuit of heightened operational efficiency in energy management projects, as noted by 14.30% of respondents. This endeavour entails streamlining processes, optimising resource allocation, and improving the overall execution of energy management initiatives to attain desired outcomes.

A bonus hurdle we can reveal, highlighted by 9.50% of respondents, is delivering appropriate energy efficiency measures and retrofits to their customers. ESCOs face the task of customising their services to fulfil the unique requirements of their clients, aligning solutions with their objectives and limitations.Biggest Energy Management Challenges

Despite the significance of these challenges, they present opportunities for ESCOs to innovate and thrive. Through the utilisation of technology, operational optimization, and the presentation of clear ROI, ESCOs can surmount these obstacles and contribute significantly to the advancement of a more sustainable energy landscape.

How can my ESCO stand out?

Your Energy Services Company has numerous avenues to distinguish itself in a competitive market. These include providing a diverse array of services, specialising in a particular niche, adopting new technologies, showcasing verified results, and attaining certification, among others.

Now, let’s delve deeper into the energy efficiency measures that are typically suggested and adopted by Energy Service Companies (ESCOs) and other industry experts.

Measurement and verification of energy savings

The measurement and verification of energy savings, which garnered support from 61.90% of respondents, stands out as one of the most advocated energy efficiency measures recommended by professionals. It is essential for establishing credibility for initiatives and validating the need for additional investments in energy efficiency.

Real-time energy monitoring

Another prominent recommendation, supported by 61.90% of experts, is to provide continuous oversight, prompt insights, and facilitate proactive management. This approach aids in identifying inefficiencies and optimising operations effectively.

Energy conservation measures

Similarly, endorsed by 47.60% of respondents, demonstrating a commitment to reducing energy demand through practical actions contributes significantly to broader environmental objectives. 

Meanwhile, renewable energy integration, supported by 38.10%, corresponds with sustainability goals, diminishes dependence on fossil fuels, and provides enduring cost savings in dynamic energy environments.

Indoor air quality and comfort

Similarly, acknowledged by 33.30% of respondents, addressing the built environment reflects an increasing acknowledgment of its impact on human health. By enhancing indoor conditions, organisations not only improve well-being but also effectively manage energy consumption.

In this article, you can explore ways to assist your clients in enhancing the air quality within their work environment.

Predictive maintenance

Predictive maintenance is recognized by 23.80% of participants as a valuable strategy for averting equipment failures and optimising energy usage. This proactive maintenance method hinges on data analytics and predictive algorithms to forecast potential issues in advance, thus minimising downtime and prolonging the lifespan of assets.

We trust that you have found this summary informative and engaging. If you’re interested in diving deeper into the full report, packed with more details including energy professionals’ priorities, upcoming energy management trends, and much more, feel free to download our Report on the State of Energy Management 2023 for free and get all the insights.

Survey Report State of the Energy 2024 - Spacewell Energy