We recently published the results of our 2019 Energy Efficiency Services survey. Our market research lead, Jana Szomolányiová, gives an overview of the survey and key results…

The 2019 QualitEE market survey provides valuable insight into the development of Energy Performance Contracting (EPC) and Energy Supply Contracting (ESC). The survey received responses from 173 energy efficiency services providers and facilitators across 15 European countries; Austria, Belgium, Bulgaria, Czech Republic, France, Germany, Greece, Italy, Latvia, the Netherlands, Portugal, Slovakia, Slovenia, Spain and the UK.

The 2019 survey follows on from similar surveys carried out in 2013, 2015 & 2017, which together offer an extensive database that can be explored on the QualitEE website (https://qualitee.eu/market-research/). Here, interactive charts can be used to compare results from different countries, trends over time, and review responses relating to EPC and ESC markets separately.

The following outlines some key results from the survey

EPC markets are growing

The survey results reveal positive attitudes towards the development of the EPC market in Europe. The majority of respondents (57%) reported that their national EPC market had seen growth over the last 12 months, with 16% of respondents describing major growth (of 6% and higher) and 41% of respondents describing slight growth (of 1% to 5%). These results are more positive when compared to the survey carried out in 2017, where only 14% of respondents reported major growth and 39% described slight growth.

The EPC concept is perceived to be too complex

The most significant barriers to EPC business are reported to be; complexity of the concept / lack of information (identified by 55% of the respondents), followed by lack of trust in the ESCO industry and administrative barriers in public sector (both identified by 42% of the respondents). In some countries, the administrative barriers are perceived to be more significant by a higher share of respondents (Greece – 80%, Portugal – 71%, Czech Republic – 67%). The results indicate a potential improvement in perceived ESCO industry trust over time as respondents citing lack of trust as a main barrier has reduced from over 50% in 2015 & 2017 to 42% in 2019.

Pressure to cut energy costs drives the EPC market

The biggest driver of the EPC business is the ‘energy savings guarantee’ as identified by 66% of respondents. Other key drivers that were identified by 40% of respondents are the pressure to reduce costs, increasing energy prices and external expertise/ turnkey service. In 2017, limited budgets in public sector was identified as the leading driver by half of respondents, however in 2019, its share dropped to 38% of responses.

Common attributes of EPCs

There are several common attributes of EPCs reported in the surveyed markets as outlined below:

• The public sector drives EPC markets and the most commonly reported client sector is municipalities (65%).
• Most respondents across all surveyed countries (62%) reported their EPCs have an initial investment outlay of less than EUR 1 million, while 32% indicated project values of EUR 1 million to EUR 5 million.
• The most common EPC contract length is 5 – 10 years as reported by half of the respondents.

ESC market growing slightly slower than EPC market

For all surveyed countries, the market growth of energy supply contracting (ESC) is reported to be slower than the growth of EPC projects in 2019. Almost half (49%) of all respondents reported that their national ESC market had seen growth over the 12 months, with 10% of respondents describing major growth and 39% of respondents describing slight growth.

Similarities and differences between EPC and ESC markets

• Respondents agreed that pressure to reduce costs and increasing energy prices were the most significant drivers of both EPC and ESC business.
• ESC providers and facilitators identified Complexity of the concept/Lack of information (52%) and lack of trust into ESCO industry (45%) as the top two barriers to the ESC market. In contrast to the EPC market, administrative barriers in public sector are only considered significant by 23% of respondents.
• The value of ESC projects tends to be lower than EPC projects. Most respondents are commonly involved in projects valued below 500,000 euros.
• Almost all respondents had ESC clients from both the public and private sector, so there is a higher share of ESC projects in the private sector than for EPC projects.

Conclusions

When looking at the development of EPC and ESC markets across 15 EU countries, there are some important results that can be drawn upon to help support market growth. Since complexity and lack of trust in the ESCO industry are identified to be the top market barriers, providing better information and higher quality services could be expected to increase client trust and demand. On the other hand, respondents agreed that pressure to reduce costs and increasing energy prices are the most significant drivers for EPC and ESC business. This implies that further uptake of energy efficiency services could also be driven by policies that bring environmental costs into the price of energy.