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

Listed author(s):
  • 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))

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.

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Paper provided by E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN) in its series FCN Working Papers with number 6/2012.

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Length: 50 pages
Date of creation: Jul 2012
Date of revision: Sep 2012
Handle: RePEc:ris:fcnwpa:2012_006
Note: revised September 2012
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  1. Vine, Edward, 2005. "An international survey of the energy service company (ESCO) industry," Energy Policy, Elsevier, vol. 33(5), pages 691-704, March.
  2. Bullinger, Monika, 1995. "German translation and psychometric testing of the SF-36 Health Survey: Preliminary results from the IQOLA project," Social Science & Medicine, Elsevier, vol. 41(10), pages 1359-1366, November.
  3. Arny, Michael, 1996. "The retail energy services company model for restructuring the electric utility industry," The Electricity Journal, Elsevier, vol. 9(1), pages 80-88.
  4. Kostka, Genia & Shin, Kyoung, 2011. "Energy service companies in China: The role of social networks and trust," Frankfurt School - Working Paper Series 168, Frankfurt School of Finance and Management.
  5. Vine, Edward L. & Murakoshi, Chiharu & Nakagami, Hidetoshi, 1998. "International ESCO business opportunities and challenges: a Japanese case study," Energy, Elsevier, vol. 23(6), pages 439-447.
  6. Okay, Nesrin & Akman, Ugur, 2010. "Analysis of ESCO activities using country indicators," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(9), pages 2760-2771, December.
  7. Sorrell, Steve, 2007. "The economics of energy service contracts," Energy Policy, Elsevier, vol. 35(1), pages 507-521, January.
  8. Goldman, Charles A. & Hopper, Nicole C. & Osborn, Julie G., 2005. "Review of US ESCO industry market trends: an empirical analysis of project data," Energy Policy, Elsevier, vol. 33(3), pages 387-405, February.
  9. Bertoldi, Paolo & Rezessy, Silvia & Vine, Edward, 2006. "Energy service companies in European countries: Current status and a strategy to foster their development," Energy Policy, Elsevier, vol. 34(14), pages 1818-1832, September.
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