Perspectives for Energy Service Company

An Expert's View about Sales in Poland

Last updated: 28 Feb 2011

Summary

The first ESCO project in Poland was initiated in the late 1990’s. At that time, ESCOs emerged
in Poland, as well as in other new EU Member States, from engineering companies working in
the energy sector. The success of this market depended greatly (and still depends) upon the
regulatory and financial situation of the marketplace. In the 15 years since Hungary has
become a regional frontrunner, Poland’s ESCO development can still be categorized as in its
infancy.

Poland’s ESCO market size is estimated at approximately 6 -13 million US dollars annually.
There are approximately 3 to 10 companies currently active on the market. The majority of
ESCO projects are aimed at developing heating in district public buildings and housing
cooperatives. Some projects also deliver street lighting, insulation and complex retrofitting. The
economic condition of ESCO companies is still quite weak, mainly due to insufficient legal
conditions, particularly in the public sector. There is, however, a strong belief that ESCO
companies may yet have a major role to play in the market as the state budget is very tight,
lending strength to creative sources of capital for financing energy projects. There is no reason
to believe that the financing of energy efficiency projects through third party sources should not
reach the same level of popularity in Poland as it currently enjoys in Western Europe.

To enable this development, the Polish government will introduce, in the second half of 2011, a
new Energy Efficiency Law that will create a tradable white certificates scheme for energy
savings. These certificates will become actual financial instruments for covering energy
efficiency activities both in the public and private sectors. Additional drivers for ESCO
development should be observed within energy price increases, international and governmental
funds now being reduced, energy efficiency programs, and continuing high energy usage in
Poland as compared to Western Europe.

Market Highlights

ESCO, in its current form, was described by the European Union Directive 2006/32/EC of the
European Parliament and of the Council of 5 April 2006 on Energy End-use Efficiency and
Energy Services (Energy Services Directive). According to the Directive, an energy service
company ESCO is a natural or legal person that delivers energy services and/or other energy
efficiency improvement measures in a user’s facility or premises, and accepts some degree of
financial risk in so doing. The payment for the services delivered is based (either wholly or in
part) on the achievement of energy efficiency improvements and upon meeting the other agreed
upon performance criteria.

In Poland, the first Energy Saving Company, Finesco S.A., began in 1997. It was established
through a partnership with the Pumped-Storage Power Station ESP SA, the engineering
company, Prochem, the venture capital firm EIP, and an investment bank, PBK Inwestycje.
This company was active for over 7 years and completed a few dozen projects focusing on
lighting system modernization and the thermo-modernization of buildings including three majorprojects with housing cooperatives in Katowice, Piaseczno and Warsaw, each one worth ca. 3-4
million USD. The company also completed projects aimed at the construction and
modernization of water and sewage networks as well as the modernization of district heating
plants. By the decision of its shareholders, Finesco stopped its activities in 2004.

Presently, according to different estimates 3 to 10 multinational and local companies are active
on the market offering energy services mainly supplementary to their core business. The
companies offering energy services as a side business are typically energy supply companies
such as Dalkia, Honeywell, Siemens Energy Services or Polish Eco SA, (Opole Heating Energy
Company). There are also engineering companies offering energy efficiency services based on
the ESCO model. While the energy supply companies focus only on energy and heat sources
modernization, some other engineering firms offer ESCO based projects both within the sphere
of building thermo-modernization as well as modernization of lighting systems. ESCO heat and
energy modernization projects dominate the market at present, although municipalities and
building owners are increasingly interested in building thermo-modernization as well as lighting
replacement to install the latest LED energy saving technology.

Most ESCO clients still come from the municipal sector, although projects also take place in the
residential (mainly block houses) and industrial sectors. Typical projects are therefore related to
lighting (street and indoor), boiler upgrades, and modernization in industries, fuel switching, and
district heating systems.

Read the full market research report
 


Posted: 18 February 2011, last updated 28 February 2011

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