Lawrence Berkeley National Laboratory Releases New ESCO Industry Report

Lawrence Berkeley National Laboratory (LBL) released its latest U.S. ESCO Industry Report: Industry Size and Recent Market Trends, 2022-2024 in September 2026. The report uses Energy Service Company (ESCO) data to analyze the size of the ESCO industry and explore trends in ESCO investments by various market segments, geographies, ESCO sizes, and business activities.

Several key findings from LBL's report highlight the changing investment trends, challenges, and opportunities for ESCOs using Energy Savings Performance Contracting (ESPC) and related models over the past few years. Investments to upgrade state/local government and K-12 school facilities make up the largest overall share of ESCO projects and revenue. That revenue share continues to grow while the federal market share slightly declined over the same time. ESPC continues to be a primary financing method for states and the MUSH market; however, the use of "as-a-service" financing models is growing, particularly in the healthcare and higher education sectors. While most ESPC contracts (70 percent in K-12 schools, 78 percent for states/universities/colleges) include measurement and verification (M&V) of savings, from 2018 to 2024 the proportion of contracts that did not include M&V has grown.

According to the report, major drivers for ESPC projects include addressing deferred capital improvements, followed by energy savings. ESCOs reported that finding qualified subcontractors in the Midwest and South was a main barrier to ESPC completion. Other barriers included the customer approval process, leadership turnover, and supply chain disruptions. Additionally, 37 percent of state and local government customers used technical assistance from State Energy Offices while K-12 schools preferred to use Owners Representatives for support. The report highlights potential opportunities for ESCOs and other stakeholders to use AI to identify project development bottlenecks and suggest remedies to shorten development timelines.

The latest iteration of this ESCO Industry Report provides State Energy Offices and other key ESPC stakeholders with vital information about the use of ESPC and related models in their states. For more information or to ask questions, please email the authors of the report by reaching out to LBL directly.