Budget-Neutral Financing to Unlock Energy Savings Potential: An Analysis of the ESCO Model in Barcelona

Abstract

The objective of this article is to introduce an increasingly popular business model known as the Energy Service Company (ESCO) model and bring to light the principal barriers to its widespread implementation both from the public and private perspectives. The ESCO model is essentially a “budget neutral” method of financing the purchase, installation and maintenance of energy efficient technologies. This concept, which incorporates notions of “third-party financing” and “energy performance contracting”, has been used successfully for quite some time in countries like the US, the UK and Germany. In this article we will analyze the possibilities and limitations in the implementation of the ESCO model in a specific case study: the Barcelona municipal area in Spain.