Energy Services Company (ESCO) business in
India: Market Opportunities and Barriers
Contents
1. Objective ........................................................................................................................... 2
2. Meaning ............................................................................................................................ 2
3. Business Models ................................................................................................................ 3
4. ESCO Industry in India ....................................................................................................... 6
5. Potential target sectors...................................................................................................... 8
5.1. Government/Public Buildings: .................................................................................... 9
5.2. Utility-based Demand-Side Management: .................................................................. 9
5.2.1. Municipal Demand-Side Management (Mu-DSM): ............................................. 10
5.2.2. Agriculture Demand-Side Management (Ag-DSM): ............................................ 11
6. Financing Options for ESCO Projects ................................................................................ 12
6.1. Institutional Framework ........................................................................................... 12
6.2. Third-party Finance .................................................................................................. 13
7. Barrier and Challenges .................................................................................................... 13
8. Conclusion....................................................................................................................... 15
Glossary of Terms ................................................................................................................ 17
Bibliography ........................................................................................................................ 18

List of Figures and Tables
Figure 1 Shared Savings Model and Economics ..................................................................... 4
Figure 2 Guaranteed Savings Model and Economics ............................................................. 5
Figure 3 ESCO Industry revenues (INR Lakhs) & compounded yearly growth (%) .................. 8
Figure 4 Role of Government in Energy Efficiency Financing ................................................ 12
Table 1 Sectors targeted by ESCOs and services offered ........................................................ 2
Table 2 Indian Energy Efficiency market potential .................................................................. 7
Table 3 Energy Consumption and Saving Potential................................................................. 9
Table 4 Energy saving potential components in buildings ...................................................... 9
Table 5 Identified implementation barriers for ESCOs in India ............................................. 15

1. Objective
This research paper involves identifying various ESCO models adopted across the world and relates those which can be applied (either individually or in combinations) as per the suitability in Indian conditions. Furthermore, it discusses associated stakeholders in India and their role in mainstreaming ESCO industry across potential sectors.
The ESCO route for achieving significant energy savings has been well recognized by large industrial and commercial establishments and government/public institutions. However its market potential in India is great, yet there are barriers standing still in the way of its progress. Based on the empirical evidences available this research paper tries to analyse the potential opportunities and barriers in development of various Demand-Side Management
(DSM) activities involving this