Executive Summary

This report describes the current state of the energy-saving business; specifically, we are presenting research results and analysis, based on an energy-saving and efficiency improvement business study of both the power companies and the Energy Service Companies, or the ESCOs.

Power companies in the U.S. are facing fierce competition due to the deregulation of the electrical power market. We tend to think that if the power companies pursue energy-saving policies, it will be akin to putting a noose around their own neck. However, in the situation where an energy crunch exists, rather than investing in a new power generation plant or buying electricity from far away, lowering the power load could be a better solution. Also, if launching new programs for energy efficiency improvement or encouraging use of renewable energy at the state level is thought to be necessary, it is easy to assume the power companies might calculate and conclude that by promoting energy savings, capital investment could be less.

Meanwhile, private sector, for-profit ESCOs -- whose purpose is aiming for the highest revenue -- have established a profit model, and money–making structure, based on past accomplishments. Total energy-saving business revenue for the fourteen ESCOs we studied in this research project was 6, 410 million dollars; eleven ESCOs were profitable, one ESCO suffered a loss, and two ESCOs had results that were unclear. While the vitality of the ESCO business seemed to be on the decline, based on the research findings, we came to the powerful realization and conclusion that the ESCO business is still quite healthy.

This report accurately portrays the U.S. energy-saving business by presenting the power company’s and the ESCO’s approaches, with actual examples to help the reader. We would be most happy if this report helps your business.

1           Excutive Summary

2           Market & Industry Structure of ESCO & Public Funded Energy Conservation Programs
2.1         Electric Utility's Energy Saving Business Operation and Flow    
2.2         Energy Services Company (ESCO) Business Operation and Flow    
2.2.1      SCO's Performance Contracting Energy saving business model flowchart
2.3         Money Flow in the energy efficiency and conservation market  
2.3.1      Internal Financing
2.3.2      Debt Financing
2.3.3      Lease and lease-purchase agreement  
2.3.4      Energy Savings "Performance Contract"            
2.3.5      Electric Utility/ Public funds rebates and financing              

3           Market Business Players
3.1         Current Status of Electric Utility for Energy-Efficiency Programs                 
3.2         Other Major Electric Utility companies with Energy Efficiency Programs          
3.2.1      Major Utilities By Ranking, Revenue, P/L and No of Employee having Energy Saving                    programs      
3.2.2      Major ESCO By Ranking, Revenue, P/L and Advantage for Energy Saving Business

4           Major Player's Alliance Map and Researcher's Analysis About Competitiveness
4.1         Electric Utility Company Segment
4.1.1      Northeast Utilities Example

5           Major Customer Profile by Industry by Large Business Share
5.1         Retail and Small Businesses
5.1.1      Retail
5.1.2      Small-Scale Businesses   
5.2         Schools/Colleges/Higher Education
5.2.1      Schools/Colleges
5.2.2      Higher Education (University)   
5.3         Commercial
5.4         Industrial
5.5         Federal/State/Local Buildings       
    

6           Actual Case Study (10) By Customer Segment
6.1         Retail and Small Business Customer & Revenue/Profit Model   
6.2         Schools/Colleges/Universities & Revenue/Profit Model   
6.3         Industrial & Revenue/Profit Model   
6.4         Commercial & Revenue/Profit Model   
6.5         Federal/State/Municipal Buildings & Revenue/Profit Model

7           Business Demand Status and Forecast
7.1         ESCO Market Segmentation     
7.2         Energy Conservation Industry Size and Forecast

8           Overall Current Growing Areas & New Business Model in the U.S. Electric Power
             Industry
8.1         Electricity Deregulation      
8.2         Impact of Electricity Deregulation on Energy Efficiency and Conservation

9           Key Factors to Make a Profit of Energy Saving Businesses

Table of Tables

Table 3-1         Current Status of Electric Utility for Energy – Efficiency Programs (E.E.P)
Table 3-2         Other Major Electric Utility Companies with Energy Efficiency Programs
Table 3-3         Major Utilities at a Glance       
Table 3-4         Major ESCO by Ranking, Revenue, P/L and Advantage for Energy Saving Business
Table 3-5         Market Share by ESCO Ownership (Categories) in 2005
Table 6-1         The Details of Energy Conservation Measures    
Table 6-2         Energy Conservation Measures
Table 6-3         Energy Conservation Measure
Table 7-1         ESCO Energy Conservation Projects by Market Segment in 2005
Table 7-2         ESCO Energy Conservation Industries Revenue 2000 – 2006
Table 8-1         Overview of the U.S. Deregulated Energy Market
Table 8-2         U.S. Electric Generating Capacity Margins as of 2001
Table 9-1         High Efficient Lighting Measures Used in Energy Saving Projects
Table 9-2         High Efficient HVA Measures
Table 9-3         High Efficient Motors

List of Figures
Figure 2-1         Electric Utility Operation and Flow
Figure 2-2         ESCO Business Operation and Flow
Figure 2-3         Performance Contracting Business Model Flowchart      
Figure 2-4         Customer – ESCO Financing Model for Performance Contracting                  
Figure 2-5         Third Party Financing Model for Performance Contract (ESCO-Bank)            
Figure 2-6         Third Party Financing Model for Performance Contract (Customer-Bank)
Figure 2-7         Benefits for Energy Savings Performance Contract Model      
Figure 2-8         Public Funded Energy Savings Programs Business Model     
Figure 3-1         Illustration of Market Share by ESCO Ownership in 2005         
Figure 4-1         Major Players Alliance Map in the State of Connecticut    
Figure 4-2         PG&E, SCE and SDG&E Alliance Map in California
Figure 4-3         Alliance Map of Electric Utilities in Washington Major Players Alliance Map in the State of                              Washington
Figure 6-1         Vendor/Contractor Revenue & Profit Model
Figure 6-2         Electric Utility Revenue & Profit Model
Figure 7-1         ESCO Energy Conservation Projects by Market Segment in 2005                
Figure 7-2         ESCO Energy Conservation Industries Revenue from 2000 – 2006         
Figure 8-1         Restructuring Status of the U.S. Electric Markets in 2006    
Figure 8-2         U.S. Electric Generation Capacity Margin as of 2001
Figure 8-3         U.S. Electric Power Grid