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Russia’s Emerging ESCO Market: Prospects and Barriers for Energy Efficiency Investments

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  • Garbuzova, Maria

    () (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

  • Madlener, Reinhard

    () (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

Abstract

The Russian Energy Service Company (ESCO) market emerges rapidly due to the new energy efficiency legislation that has been implemented since 2009. However, a clear identification of the Russian ESCOs, comparable to those operating in the Western markets, remains rather difficult. Hence, aside from the independent ESCOs identified, further energy service-providing companies were within the scope of this survey. This paper delivers, to the best of our knowledge, the first systematic empirical investigation of the Russian ESCO industry, taking into account experiences from the international ESCO markets. Building on the insights gained from reviewing the existing international and Russian academic and non-academic literature on the ESCO concept, an explorative, questionnaire-based survey among 161 Russian energy companies and organizations was conducted. Twenty eight usable responses were returned, corresponding to a response rate of 17%. Our findings show that the new energy efficiency legislation addresses and supports the state sector. There are almost no state measures supporting the commercial ESCO sector. Most of the projects are financed either through ESCOs’ own funds and direct loans to customers, or by the customers themselves. In contrast, Russian banks rarely provide direct loan financing for energy efficiency projects of ESCOs, but rather offer financial leasing contracts. The contractual form “guaranteed savings”, which is generally more applicable in mature ESCO markets, is gaining in importance, while “shared savings” is barely used.

Suggested Citation

  • Garbuzova, Maria & Madlener, Reinhard, 2012. "Russia’s Emerging ESCO Market: Prospects and Barriers for Energy Efficiency Investments," FCN Working Papers 6/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Sep 2012.
  • Handle: RePEc:ris:fcnwpa:2012_006
    Note: revised September 2012
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Dergiades, Theologos & Madlener, Reinhard & Christofidou, Georgia, 2012. "The Nexus between Natural Gas Spot and Futures Prices at NYMEX: Do Weather Shocks and Non-Linear Causality in Low Frequencies Matter?," FCN Working Papers 17/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Sep 2013.
    2. Rohlfs, Wilko & Madlener, Reinhard, 2013. "Challenges in the Evaluation of Ultra-Long-Lived Projects: Risk Premia for Projects with Eternal Returns or Costs," FCN Working Papers 13/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    3. Harmsen - van Hout, Marjolein & Ghosh, Gaurav & Madlener, Reinhard, 2013. "The Impact of Green Framing on Consumers’ Valuations of Energy-Saving Measures," FCN Working Papers 7/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    4. Akman, Ugur & Okay, Esin & Okay, Nesrin, 2013. "Current snapshot of the Turkish ESCO market," Energy Policy, Elsevier, vol. 60(C), pages 106-115.
    5. Harmsen - van Hout, Marjolein & Ghosh, Gaurav & Madlener, Reinhard, 2013. "An Evaluation of Attribute Anchoring Bias in a Choice Experimental Setting," FCN Working Papers 6/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).

    More about this item

    Keywords

    Energy Efficiency; Financing; Energy Service Company; ESCO; Energy Performance Contracting; EPC; Energy Service Providing Company; ESPC;

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