Development of Energy Service Companies Market and Policies

image of Development of Energy Service Companies Market and Policies
It examines the current status of ESCO development in twelve countries participating in the project. For the purposes of the report all participating countries are divided into three groups: member states of the European Union (EU), South-Eastern European countries and countries of Eastern Europe and Central Asia (the latter represented by Kazakhstan). The development of the ESCO market in these countries is not at the same level. The proposed grouping helps examine the current situation with ESCOs in the countries based on their geographical situation and neighborhood as well as the membership in and/or relationship with the EU. Information presented in this report is based on the results of desk research, findings of the Regional Analysis of Policy Reforms to Promote EE and RE Investments (undertaken earlier in the framework of the FEEI project), information provided by the National Coordinators (NCs) and National Participation Institutions (NPIs) in the framework of the project, consultations with experts in the ESCO market area and other available information.

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South-Eastern European, Eastern European and Central Asian countries are confronted with a wide range of economic and environmental problems caused by their inefficient and polluting energy systems. At the same time, their energy economies provide some of the most promising opportunities for reducing global greenhouse gas emissions. Achieving the potential will require cost-effective energy efficiency (EE) improvements and deployment of renewable energy (RE) technologies. The investment potential for energy efficiency is so large in these countries that only the private sector can provide the capital needed to achieve meaningful results. Mobilizing private capital requires a market for energy efficiency in which large investments can be made with low transaction costs at an acceptable ratio of risk to return within a reasonable period of time. At present, private investors do not often finance energy efficiency projects in these countries because dedicated sources of financing are lacking and local banks are generally unfamiliar with such investments. Another obstacle in financing energy efficiency projects is the absence of policy and institutional support for their implementation. The lack of knowledge and experience of how to select and formulate energy efficiency investment projects is often a challenge for local experts.

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