Growing Need for Energy Efficient Solutions Fuels Market Expansion
Rising energy prices and the fact that the EU is committed to comply with the Kyoto treaty, therefore forcing member states to focus on energy efficiency issues in order to mitigate climate change are factors favouring energy efficiency measures. Accordingly, the market for energy savings services, including performance contracting, is set to achieve exciting growth. Although, at present, high energy prices play a greater role in the rapid growth of guaranteed savings contracts, the growing importance of social responsibility towards climate issues is expected to contribute to market expansion in the future. While energy prices may witness a decline, concerns about the effects of climate change are likely to remain.
"Public and private organisations have been compelled to improve their focus on energy efficiency issues," notes the analyst of this research service. "This is due to the volatility of energy prices, as well as legislative and political pressure to eliminate the effects of global warming. This has resulted in greater emphasis on performance contracting, as service providers can help customers achieve cost savings and implement energy-efficiency measures, thereby contributing towards a reduction in greenhouse gas emission."
Education of Potential Customers on Benefits of Energy Efficiency Measures Crucial for Market Growth
In terms of market development, the European market for energy performance contracting services is still young and offers high potential for growth. While Germany, the United Kingdom and France are among the most developed markets and are expected to show relatively lower growth, the rest of the European market is likely to be buoyant in the future. This is due to the increasing need for energy efficient solutions, high energy prices and various EU or national incentive programmes. While these trends augur well for the market, the lack of customer commitment to energy efficiency, complicated savings calculation methods and the reluctance of financial institutions to provide financing are factors hindering market progress.
Since the European performance contracting market is young, end user awareness is still relatively low. Limited understanding of energy efficiency and performance contracting is a challenge that needs to be addressed. "There is a lack of experience and information in the market, which has led to scepticism among potential customers," explains the analyst. "Moreover, it is a low interest area for the senior management in several organisations where energy management is a non-core activity." In order to overcome these challenges, service providers will need to spend a substantial amount of money and time in order to market their services. Over time, as more references become available to the public, the need for education will diminish, though not completely disappear.
