North America Energy Saving and Performance Contracting Growth Opportunities

North America Energy Saving and Performance Contracting Growth Opportunities

Energy Efficiency Policies to Create Growth Pipeline for Resilient Building and Clean Energy Strategies

Buildings are becoming more energy-intensive and with features like electric vehicle charging adding to the existing load, the need to reduce energy consumption acquires an even greater importance. Energy saving and performance contracting (ESPC) is one way to achieve energy efficiency. In that sense, North America has been the second-largest market behind China for ESPC.

The North American ESPC market witnessed a drop in its growth rate in 2021 and 2022. This can be attributed to the policy changes in the US government and delayed legislation in Canada. The public sector was the most affected but the decline in growth rate was offset by huge investments in the industrial and commercial segments, which focused on improving the standards and safety of buildings after COVID.

Frost & Sullivan estimates that the market will grow by 5.9% between 2022 and 2028. Key growth drivers in the North American ESPC market include aging infrastructure needing upgrades, rising electricity costs, rising fossil fuel usage, building 2030 and 2050 energy targets to achieve net zero energy buildings, and financing options that reduce the capital expenditure burden on customers. Growth restraints include irregular policy changes, reduced government funding for public projects, contractual complexities, and project delays due to external factors such as supply chain disruptions, delays in approvals, and natural calamities.

This study segments the market based on customer sector and energy conservation measures. By customer sector, the study analyzes federal, state/municipal, K-12 schools, tertiary education (universities), healthcare, public housing, and industrial and commercial. By energy conservation measure, the study analyzes lighting, heating, ventilation, and air conditioning (HVAC); building automation and controls (BACs); building envelope, water conservation, renewable energy, and others (including CHP and microgrids).

Reformation of energy efficiency policies, analytical platforms that complement hardware solutions, and a focus on health and well-being inside buildings along with energy efficiency will be critical to the future growth prospects of this market.