Diffusion Dynamics of Energy Service Companies in the Residential Sector

Energy service contracting (EPC) is one of the private sector instruments to improve end use energy efficiency. The dominant part of EPC projects is implemented in the industrial, governmental and municipal sectors while the residential sector has been less attractive to energy service companies (ESCO). This paper describes the first EPC project implemented in a multi apartment building in Latvia. A combination of this project experience, the system dynamics modelling, and microeconomics theory has been used to develop the system dynamics model to capture the interactions and feedback from the ESCO market for residential building energy efficiency. Three policy tools were tested for use in improving the performance of the system. The purpose of the tests was to facilitate the diffusion (or distribution) of EPC in the residential sector.