Journal
ENERGY POLICY
Volume 61, Issue -, Pages 783-787Publisher
ELSEVIER SCI LTD
DOI: 10.1016/j.enpol.2013.06.047
Keywords
ESCo; Heat entrepreneurship; Business model
Funding
- Intelligent Energy Europe
- Bio-Sol-ESCo project
- Northern Periphery Programme project MicrE-Micro Energy
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Energy Services Companies are widely implemented for improving energy efficiency both in the public sector and industry. The model has also been introduced as a business model for biomass-based heat entrepreneurship. However, the residential sector has been problematic with regard to ESCo adoption and constitutes a minor share of ESCo operations. The barriers, both social and economic, are many. This paper focuses on the application of ESCo as a business model for heat entrepreneurship in Finland. First, we present the ESCo model and a review of the main barriers. Second, we present the modelling with aspects of profitability and risk sharing. Third, we demonstrate the operation in the residential sector by using 26 housing associations as a case study. We simulate the energy investment, profitability of operation, and the sharing of risks between the customer and the ESCo. The results indicate that the ESCo model is challenging in our case area. Low profit levels and the assumed customer's preference for achieving cost savings from the beginning of energy renovation can result in long contract periods tying up the capital. The ESCo model is unattractive in the current business climate, requiring modifications or integration with other maintenance services of housing associations. (C) 2013 Elsevier Ltd. All rights reserved.
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