ESCO - Third Party Financing

ESCO is an acronym, which means: Energy Serving Company or Energy Saving Company.

The ESCO scheme is a “French invention” that has existed since the beginning of the 1900’s and revived in 1980 in the European Union. It is a scheme having spread intensively from the 1990’s whose immense advantage is to result in energy and cost savings without the own funds of the Customer. The Customer pays for the ESCO company from the savings thanks to the up-to date system and the qualified operation.

Esco finanszírozás modell

What or who is the ESCO company?

Energy serving company:  is a natural or legal entity who renders energetic services and/or takes other measures to improve energy efficiency in the equipment or premises of the Customers, undertaking a certain amount of financial risk by acting so. Payment of the rendered service (partly or fully) is subject to achieving improvement in energy efficiency as well as meeting other agreed performance criteria (Defined by the Energy Centre).

Within the framework of the ESCO scheme the Customer and the ESCO company concludes a long-term contract to render heat supply for the buildings. It is the heat energy supplier’s task to implement investment required for the guaranteed heat supply and to operate the installed equipment during the term specified in the contract. Purchase of the energy sources as well as invoicing heat energy measured by the consumption also parts of the undertakings of the ESCO company. Apart from heat supply fees (base fee and heat fee) no further costs for instance renewal, maintenance, repair shall burden the clients.

Frequent questions and answers related to ESCO financing:

  1. What is the main idea of ESCO energy efficiency contract?
    Within the energy efficiency project the ESCO company renews the energetic supply system of the facility and operates it in the long-run. After the reconstruction the energy supply system will be able to operate at a more economical way than before. The Customer does not have to contribute to financing the energy supply equipment with own funds, the total amount will be covered by the ESCO company. The renewed energy supply equipment shall remain in the possession of the ESCO company during the entire term of contract. It is the ESCO company’s duty to purchase energy sources. The average term of energy efficiency contracts is 5 -20 years.
  2. What does ESCO energy efficiency contract offer you?
    The ESCO takes over planning and design, construction, operation and repair costs as well as financing the new equipment. Energy supply and heat supply guarantee is ensured during the entire term of contract. All operation tasks (maintenance, troubleshooting, renewal, official reading and report) shall be carried out by the ESCO company.

    The Customer shall pay the following fees:
    1.  Monthly base fee - fixed HUF/month - (availability, operation and maintenance, troubleshooting costs of the system and the guarantee fee during the term of contract), furthermore
    2. Heat fee (HUF/GJ) – changes depending on consumption – (the counter value of the measured heat consumption).
  3. How to finance the reconstruction of the heat supply equipment?
    After the reconstruction the energy supply system - mainly as a result of the achieved savings on energy and operation costs – may be operated at lower costs than previously. The reconstruction of the heat supply equipment may be financed from the costs savings achieved in this manner.
  4. What are the advantages of ESCO financing?

    - Own investment is not required; it is a specifically advantageous for those having lack of financial funds
    - Maintenance reserves are saved
    - Funds are released for other purposes, investments
    - No maintenance, operation and repair costs
    - Annual current costs may be written off
    - Increase in real estate value without own investment
    - Modern, unified energetic and technical solutions are born
    - Environment-friendly and renewable energy sources may be installed
    - Lower emission and CO2-load
    -  Reduced energy consumption
    -  Safe, high-tech products are installed
    - Flexible, fast, efficient, safe and convenient scheme whose responsibility is taken by the ESCO itself
    - The ordered temperature is supplied by the ESCO company

  5. Who do we offer conclusion of ESCO contract?
    - State and municipal public administration
    - Larger residential buildings, block of flats
    - Industrial sites
    - Medical and educational institutions
    - Sport facilities
    - Church institutions
    - Facilities using district heat system

    6. How much does it cost to work out an ESCO scheme tailored to the Client’s needs?

    Paying a site visit, setting up the ESCO offer and the draft contract is free of charge.

    The most important questions and answers related to ESCO have been collected here for you!