Energy Service Companies

Small Industries Development Bank of India



What Is ESCO

Introduction to ESCO

Energy service companies (ESCOs) develop, design, build, and arrange financing for projects that save energy, reduce energy costs, and decrease operations and maintenance costs at their customers' facilities. In general, ESCOs act as project developers for a comprehensive range of energy conservation measures (ECMs) and assume the technical and performance risks associated with a project.

ESCOs are distinguished from other firms that offer energy-efficiency improvements in that they use the performance-based contracting methodology. When an ESCO implements a project, the company's compensation is directly linked to the actual energy cost savings.

The substantial energy-efficiency retrofits and renewable energy technologies inherent in energy savings performance contract (ESPC) projects typically require a large initial capital investment and may have a relatively long payback period. Debt payments are tied to the energy cost savings guaranteed for the project, so the agency pays for the capital improvements of the ESPC project with the money saved by the project (i.e., the difference between pre-installation and post-installation energy use and other related costs).

“ESCO” means a firm / company engaged in providing technical consultancy & other support / solutions to the Host with the objective of achieving savings in energy through an underlying ESPC.

The ESCOs empaneled with Bureau of Energy Efficiency (BEE) shall be eligible under the PRSF. Further, the JVs / Consortia of entities shall also be eligible subject to the following:

- A JV of entities, formed under the laws of India, where ESCOs hold at least 50% share in equity of the JV of entities, or

- Consortium of entities executing an ESPC where ESCOs hold at least 50% share in contract value

Frequently Asked Questions

Who can benefit from PRSF?

PRSF is designed to benefit a wide range of stakeholders, including businesses, homeowners, and organizations seeking support for energy efficiency projects.

What types of energy efficiency projects are eligible for PRSF support?

PRSF supports a diverse array of energy efficiency projects, such as retrofitting buildings, upgrading lighting systems, and implementing renewable energy solutions.

What is the role of financial institutions in PRSF?

Financial institutions play a pivotal role in PRSF by providing funding and expertise to help facilitate energy efficiency projects, making them more accessible.

Is PRSF limited to a specific region or sector?

PRSF aims to be inclusive and typically is not limited to specific regions or sectors, fostering energy efficiency projects in diverse areas and industries.

Can governments or public entities participate in PRSF?

Yes, governments and public entities are encouraged to participate in PRSF, as their involvement can drive significant impact in promoting energy efficiency on a broader scale.

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