ENERGY

SERVICE
COMPANY
[ESCO]
WHAT IS AN ESC
In O
simple? term,
Private Company
providing Energy
Efficiency Services
 N E E D for E S C
N e e d yO C! !o m p a n
y :
May not have
Finance
May not have
technical expertise
 PERFORMANCE
E SCONTRACTING
C O Provides
Energy Savings for a
Fee
S t e p s I n v o l v e
d:
Conduct Energy Audit
 Secure Finance for
Investment
Implement the
Energy Saving
Projects
Operate & Realize
 E S C O : TYPES /
Guaranteed
MODELSSavings
Shared Savings
Payment from
Savings
End - use outsourcing
Miscellaneous Types
 1 GUARANTEED SAVINGS
MODEL
Customer takes out
Normal Loan ( appear
in the Balance Sheet )
E S C O guarantees
Loan Payment from
Savings
E S C O pays difference
Advantages:
E S C O takes complete
responsibility as it has
commitment towards
Loan Repayment
E S C O can undertake
more project as
Financing is not part of
 2 SHARED SAVINGS
CustomerMODEL
does not take
loan ( will not
appear in Balance Sheet )
E S C O Finances the
Project
E S C O takes Performance
& Credit Risk
Advantages
Scheme size is not a

concern to the
Customer as he does
not finance
 3 PAY FROM SAVINGS
It is a MODEL
sub set of
Guaranteed Savings
Model
Higher the savings,
faster the repayment and
vice versa
 4 END USE
OUTSOURCING
ESCO operates and
maintains Equipment
or System
Output ( say Steam,
Compressed Air etc )
 EQUIPMENT SUPPLIER CRE

5 DIT
&
EQUIPMENT LEASING
1) Supplier designs &
implements the Project and
measures the performance
2) Equipment Supplier Credit
) Customer owns the
equipment :
3) E q u i p m e n t L
easing
Supplier owns
equipment till full
repayment
 ESCO AS JUST A
TECHNICAL CONSULTA
Conducts N T audits,
suggests schemes and
supervises
Fee payment based on
Performance & Savings
Fixed / Bonus for higher
 BARRIERS IDENTIFIED
Lack of Legal and Financial
Infrastructure to support
Performance Contracts
Limited ability of local ESCOs to
obtain bank financing or raise
equity capital
Lack of bank experience with EE
projects and/or performance
GENERAL RECOMMENDATI
ON
&
W A Y to
Industry F OBuild
RWAR D
Technical
Capabilities to develop
Feasibility Studies
Industry to Establish
Financial / Management
System to apprise the
Potential Energy
 Qualify for financing
Support the
implementation
Financial Sector shall :
Recognise the
opportunities available
Develop products and
programs to respond to