Esco in Danish municipalities: Basic, integrative or strategic approaches?

Purpose: The aim of this paper is to discuss the possible benefits of involving Energy Service Companies (ESCO) in realising energy savings in municipalities, and how ESCO projects can be formulated very differently in the various municipalities, according to building volume, use of technologies, energy savings, type of collaboration etc. Background: Since 2008, several Danish municipalities have started energy retrofitting of municipal buildings, based on contracts with Energy Service Companies. In spite of the strong growth of ESCOs, there is also widespread scepticism about ESCO, as many municipalities see an in-house approach as a better alternative. Approach (Theory/Methodology): Our research is based on literature studies and on qualitative interviews with Danish municipalities carrying out ESCO projects, as well as with ESCO providers. Results: Our studies suggest that different ESCO approaches are being used in Danish municipalities, which we label the basic, the integrated and the strategic ESCO approaches. The three approaches include different ambitions, technologies, economies and innovation potentials. Whereas the basic approach implies a ‘traditional’ guarantee-based model, with relatively few buildings, energy retrofitting and low investments, the integrative and strategic approach include a higher degree of partnership, a more ambitious building renovation approach, and more innovative understandings of facilities management. We also compare ESCO with energy retrofitting as an in-house approach, which many municipalities are considering. Practical Implications: We suggest the practical implications of our findings, as a short characteristic of the different approaches, intended for municipalities to start up energy retrofitting of municipal buildings.