Energy Services Company (ESCo)—common issues in ESCo projects
Produced in partnership with Matthew Collinson of Energetics
Energy Services Company (ESCo)—common issues in ESCo projects

The following Energy guidance note Produced in partnership with Matthew Collinson of Energetics provides comprehensive and up to date legal information covering:

  • Energy Services Company (ESCo)—common issues in ESCo projects
  • What is an Energy Services Company (ESCo)?
  • The electricity aspects of an ESCo
  • The heat aspects of an ESCo

What is an Energy Services Company (ESCo)?

There is no single definition of what an ESCo is, and ESCo has no special legal meaning. The term has been used to describe businesses engaged in the generation, distribution and/or supply of energy to end customers, as well as those engaged in demand management, green retrofitting and other energy efficiency measures. This Practice Note focuses on ESCos involved in the production and supply of energy (specifically heat as steam or hot water) rather than energy efficiency projects, and uses 'ESCo' accordingly.

An ESCo of this type will typically feature co-generation of heat and electricity in a combined heat and power (CHP) plant; there are several variants on this including the combined cooling, heat and power plant (CCHP)—where absorption chillers use some of the heat provided by the CHP plant to produce chilled water for air conditioning or refrigeration; and quadgeneration—which involves carbon-capture technologies. This Practice Note refers to ‘CHP’ for ease but, in practice, many of the issues are the same.

For technical information on CHP, see Practice Note: Combined heat and power—technology.

The electricity aspects of an ESCo

Broadly speaking, the electricity aspects of an ESCo can be structured in two ways:

  1. by using a distribution system provided by a licensed distribution network operator (DNO) to convey the electricity generated by