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What is an ESCO?

The acronym ESCO (Energy Service Company) is a recognized worldwide term for all companies that provide comprehensive energy services and solutions. These services include a wide range of activities, from development to implementation and financing of projects in such a way that the return on investment is realized through subsequent savings in energy costs and maintenance that occur after the overall project implementation.

According to the directive of the European Parliament and Council 2006/32/EC on energy end-use efficiency and energy services ESCO (Energy Service Company) is a natural or legal person that delivers energy services and/or other measures to improve energy efficiency (reducing the use of fossil fuels, mitigation of CO2 and other greenhouse gases) on the premises of the beneficiaries, and to some extent assumes the financial risk.

The objective of the ESCO model is to ensure lower costs for energy and maintenance through the installation of new, energy-efficient and environmentally friendly equipment and by optimizing the energy systems. Projects are financed from achieved savings in the contracted timeframe that depends on the type of client and the size of the project, while the savings are reflected in reduced energy consumptions and lower maintenance costs. The basic requirement of an ESCO project is that it should be performed on existing infrastructure (through reconstruction, rehabilitation, replacement or modernization) because this is the only possible way to compare present and future (reduced) power consumption.

In general, the ESCO company assumes the risk of energy savings by issuing guarantees, while in addition to innovative projects aimed at improving energy efficiency and reducing energy consumption it often offers financial solutions for their realization. During the energy efficiency payback period, the customer pays the same amount for the cost of energy as before the implementation of the project, which is divided into actual (reduced) costs of energy and the costs associated with investment payback. After the payback, the ESCO company leaves the project and all the benefits to the client. All projects are tailor made to the requirements and desires of the client and during or after the implementation of the project, a supplementary extension or upgrade of services, with adequate investment division options, can be offered. The client is therefore able to modernize its' equipment without the associated investment risks, since the savings risk is assumed by the ESCO company. In addition, after the full repayment of the investment, the client achieves a positive cash flow during the repayment period and in long-term savings.

An additional advantage of the ESCO model lies in the fact that during all phases of the project the client is working only with one company (one-stop shop), rather than with several different operators, thus greatly reducing the cost of energy efficiency and the associated investment risks. Also, the ESCO project covers all energy systems at a specific location, which enables optimal selection of measures to be implemented and a favourable ratio of investment vs. savings. Users of ESCO services can be private and public companies, institutions and local and regional governments.

The ESCO model was originally developed in Europe, and later as a concept spread to North America. The biggest investments in energy efficiency and the development of the ESCO model were conducted in Germany, Austria and the UK. These markets are the most developed ESCO markets and serve as examples of good practice on a global level.

After full repayment of the investment through energy savings, our company hands out all of the project benefits to the client. It is important to note that all of our projects are tailor made to the requirements and desires of the client, and we can always arrange, during or after the implementation of the project, a supplementary extension or upgrade of services through additional reconstruction, expansion of the project or other similar procedures, with adequate investment options.

It is good to know:

The ESCO business model enables public bodies the implementation of investments aimed at increasing the energy efficiency of street lighting without the need to tap into the budget or increase budget expenditures.

ENBEKON with its' innovative approach and clearly elaborated concept of street lighting energy efficiency enables almost immediate savings without the need to investing your funds and thus completely eliminates the possibility of added expenditures of local and regional authorities that might arise from possible increases in electricity prices.

ENBEKON LTD. | Folnegovićeva 1C | 10000 Zagreb | Croatia | T: +385 1 3535 260 | F: +385 1 3535 261 | E: info@enbekon.hr

About the group

Founder of ENBEKON LTD. is VR Enbekon eG, a registered cooperative with the objective of consulting and conception of energy projects. It was founded in May 2009 as an initiative of Cooperative Banks in the Black Forest. In October 2011 the VR Enbekon eG board was transferred from the banking initiative to industrial partners in order to nationally and internationally establish the concept faster.