Mint Research is currently undertaking a study into China’s Energy Service Company (ESCO) industry in partnership with SJ Grand, a financial advisory firm.

Study Outline

Under an ESCO style energy saving contract,  energy efficient technologies and methodologies are installed at a customer’s facility and then the resulting savings pay off the capital investment, and leave money left over for the customer. China’s ESCO market has been largely initiated by international development institutions, primarily the World Bank and its commercial arm, the International Finance Corporation.

This study aims to discover if China’s ESCO market can move beyond relying on financial and technical assistance from development institutions and become a fully functioning, organic and self-perpetuating industry.

The study will measure the quality of the market capacities necessary for ESCO activity in China: the existence of a legal structure secure enough for complex contracting, the number of banks with ESCO loan capability, the availability of ESCO customers with the motivation to carry out energy efficiency projects, and the regulatory and tax environment for effective ESCO operation. The study will go on to look at domestic ESCO capability; whether the appropriate energy efficiency technologies, methodologies and management expertise are available in China to open up the huge energy saving potential. The operation of Foreign ESCOs in China and the possibility for mutual exchange with domestic ESCOs will also be examined.

It will conclude with recommendations for mitigating the factors holding back the development of China’s ESCO market.

Research

We are looking for Chinese and foreign ESCO companies who would be willing to help with our research and would like to gain some exposure. We are also looking to talk with consultancies and financial institutions who work in this area.

This study will seek to examine

1. the extent to which Chinese ESCOs are dependent on institutional development aid;
2. the quality of market capacities necessary for ESCO activity in China;
3. why funding for ESCO projects is problematic;
4. whether the regulatory and tax environment promotes development of the Chinese ESCO industry;
5. domestic ESCO capability – whether the appropriate energy efficiency technologies, methodologies and management expertise are available in China to open up the huge energy saving potential;
6. solutions to the issues holding China’s ESCO industry back

Media Coverage

Energy Service Companies in China – Green Leap Forward 28 November 2009
Guest blogger Tristan Edmondson describes China’s growing Energy Service Company (ESCO) industry at this influential green technology and climate change blog.

On trying to make China energy efficient - Proactive Investors China, 3 September 2009
What could be one of the most exciting sectors in China’s cleantech market is a financing structure for improving energy efficiency called energy performance contracting. In the US it has already played a major factor in reducing the amount of energy needed to produce one unit of GDP.