According to a recent report, “Energy service companies, or ESCOs, will see 26% annual growth from 2009-2011 with revenue reaching $7.1 to $7.3 billion, the report estimates. ESCOs are private companies that typically offer energy savings improvements under long-term performance contracts.” This has to be good news for a company like IDT Energy, “one of the leading suppliers of electric and gas services to residential & business customers.”
But what economists and businessmen are curious about is, given that the economy is in such a poor state right now, how are these companies doing so well? The answer is apparently that most of the business generated is coming from what is known as the MUSH market (municipal and state governments, universities, schools and hospitals). This is because such organizations/companies do not encounter the “boom and bust of private business,” so were hit less by the recession. As well, they are receiving “federal stimulus dollars to spend on energy efficiency.” But what should also be noted for a company like IDT Energy is that this news shouldn’t encourage them to sit on their laurels since the fact still remains that “interest in energy efficiency ebbed among big businesses, not surprising given the economy [which] accounted for 15% of market share in 2006, but only 7% in 2008.” A report showed that not knowing what the future holds is making them reluctant to commit to long-term performance contracts.