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New business model encourages ESCOs to join forces with demand response aggregators

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The NOVICE project – funded under H2020 Energy Efficiency - has been testing the validity of an innovative new business model for Energy Service Companies (ESCOs) that combines both energy efficiency and demand response services into a single service offering.

The idea is that by cooperating with demand response aggregators, ESCOs can access both energy efficiency savings and revenues from offering the site’s flexibility to the grid, thus enabling faster repayment of the initial investments. An Enhanced Energy Performance Contract (EPC) will guarantee building owners a minimum level of energy savings and occupant comfort whilst ensuring that a maximum value can be extracted from the flexibility potential of on-site energy assets.

 

The result is a new business model that promotes ESCOs to work together with demand response aggregators to provide a holistic package of energy services, enhancing the business case for renovation projects and driving up renovation rates across Europe. Both parties seem to recognise the benefits of working together in terms of reduced cost of sale through cross referrals and warm leads, access to new markets and clients, and the added value that can be offered to clients through the ability to offer the services of the other party.

 

The NOVICE project has shown that when scoping energy efficient building refurbishments, including demand response as an opportunity can generate an additional revenue stream that could significantly reduce overall project payback period. 

 

As the flexibility markets around Europe mature, the opportunities to deploy the NOVICE model will only increase.