The Evolution of Energy Service Companies (ESCOs) in Ontario: Extending the Traditional ESCO Model to Renewable Energy Contracting

Abstract: A number of ESCOs in Ontario are expanding their standard business model of energy performance contracting to include financing and expertise for the inclusion of renewable energy generation. This paper is a qualitative exploration of this business practice, referred to here as “renewable energy contracting”. Through semi-structured interviews with ESCO experts and a literature analysis, this research seeks to understand what this expanded business model looks like in practice and what its main drivers and constraints are. With the use of a modified PEST analysis the findings are analysed to discover how policymakers can best support this business practice. The results of the TOWS analysis reveal how ESCO managers can best use their strengths and minimise their weaknesses to seek out opportunities for this business model while minimising the effects of external threats. The main findings are that a high degree of policy support and political stability are required for the business practice to remain economically feasible, and that certain social and technological factors are also essential to the success of renewable energy contracting.