Energy service sector in PH among world’s maturing markets – global study

Date Published: May 7, 2025

İSTANBUL, TÜRKIYE, 7 May 2025 – The Philippine energy service company (ESCO) sector was declared here today as one of the moderately growing and mature ESCO markets in the world today. The observation was contained in the Global ESCO Market Report 2025, which was launched during the opening day of the International ESCO Symposium 2025, an annual gathering organized by the Global ESCO Network, led by the partnership of the United Nations Environment Programme Copenhagen Climate Centre (UNEP-CCC) and the Efficiency Valuation Organization (EVO) and hosted this year by the Energy Efficiency and Management Association of Türkiye (EYODER). Dr. Clara Camarasa of UNEP-CCC, who co-authored the study with Dr. Søren E. Lütken and Trupti Yargattimath, officially launched the report during her opening keynote of the symposium.

Speaking after the keynote, Philippine Energy Efficiency Alliance (PE2) president Alexander Ablaza told the participants that the ESCO sector in the Philippines has over a quarter-century of evolving market maturity. The Philippine Government first accredited ESCOs in 2008, but the system was replaced by a new ESCO registration and certification process when the new Energy Efficiency and Conservation (EEC) Act was passed into law in 2019. Ablaza explained that the EEC law supports the local ESCO market growth by: (1) creating market demand through the obligations of commercial, industrial and transport establishments consuming at least 50,001 kWh in fuel and electricity per year; (2) certifying energy efficiency (EE) professionals such as energy managers, energy auditors and energy conservation officers, as well as recognized training institutions; (3) granting of tax-based fiscal incentives for upfront EE investments made by ESCOs and third-party project developers; and by (4) enabling innovative public procurement and financing modalities involving ESCOs — government procurement of ESCO services, public-private partnership transactions and joint venture agreements with government corporations. He said, “I am pleased to report that registered and certified ESCOs in the Philippines have been growing steadily in the last decade — from 15 ESCOs in 2015 to 64 in 2024.”

The newly launched Global ESCO Market Report 2025 shows that ESCO projects in a cluster of countries typically deliver identical savings rates of around 30%. The markets of Czech Republic, Germany, Malaysia, Taiwan, the Philippines, Thailand, Spain and Belgium indicate “relatively mature ESCO activity and consistency in implementation modalities and technical performance.”

The Philippine ESCO market joins those of Slovakia, South Korea, and Türkiye in reporting between 40 and 70 active projects, indicating smaller but potentially expanding ESCO sectors. In Southeast Asia, Thailand, Malaysia, and the Philippines show promising mid-level ESCO activity, reflecting growing demand but still falling short compared to leading markets such as those of the US and China.

Asia-Pacific markets of Japan, Thailand, South Korea and the Philippines saw a higher number of new ESCO projects compared to some individual European countries. Japan alone recorded 123 new ESCO projects in 2023, while Southeast Asian markets collectively launched 105 new projects, thereby confirming a growing ESCO market in the region.

The Philippines, South Africa, China, Indonesia, Belgium, Hungary, Germany, and Slovakia all report moderate growth, reflecting a global trend towards increasing acceptance of the ESCO model.

Interestingly, South Korea and Japan focus their ESCO investments in the industrial sector, while the Philippines and Uganda report a significant concentration of ESCO activity in commercial buildings, with 61–80% of projects targeting this sector.

There appears to be a correlation between the prevalence of single-technology approaches and the focus on commercial buildings - particularly in Taiwan, the Philippines, Malaysia, and Slovakia.

A 10-year average duration for public sector projects was observed in South Africa, Indonesia, the United Arab Emirates, Hungary, the Philippines, Slovakia, the Czech Republic, and the Netherlands. In the private sector, contracts tend to be shorter, with an average duration of 6.7 years. However, a few markets - including China, Japan, the Philippines, and Thailand - report longer private sector contracts than their public sector counterparts. These same countries also exhibit higher volumes of private sector ESCO activity, suggesting a greater degree of maturity and market confidence in this segment.

Commercial financial institutions are the most frequently cited source of ESCO funding, particularly in the United States, China, the Philippines, Czech Republic, Slovakia, and Türkiye. Client contributions or project participation also play a central role in several countries, including South Africa, Belgium, and the Philippines.

While equity financing is a logical component of ESCO models - especially when ESCOs co-invest in projects - it ranks only fourth in overall use. Countries such as Poland and Thailand show relatively high use of equity, suggesting a balanced financing structure. In contrast, places like the UK and the Philippines report lower reliance, potentially due to other available instruments or strong public sector involvement.

Access to finance continues to be one of the most significant challenges facing ESCOs globally. Despite the increasing involvement of commercial financial institutions in countries like the United States, Türkiye, and the Philippines, many markets still rely heavily on client funds or public financing programs.

The Global ESCO Network defines an energy service company (ESCO) as a legal entity that delivers energy services, energy efficiency improvement measures and/or demand side renewable services in a user’s facility, premises and operations and accepts some degree of financial risk directly linked to the project performance in so doing. The implemented services and improvement measures are based upon a holistic analysis of the users’ energy and resource demand, against financially and technically viable alternative energy source and resource efficient low-carbon technologies, and/or energy management systems. The remuneration scheme of the ESCO for the services delivered is based on the measured and verified achievement of energy efficiency improvements and of any other agreed performance criteria.