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Energy Performance Contracting Market Props up Ailing UK Energy Services Sector

The UK energy services market is stuck in a slump. Back in 2016, Verdantix forecast a five-year compound annual growth rate (CAGR) of just 2%. We are currently wrapping up our research on the refresh of this forecast but don’t expect any near-term break-out in growth rates.

What has gone wrong with this market? Such anaemic rates of growth are borne out of weakness in the two primary drivers of market growth – energy prices and government legislation. Energy prices have barely moved in the last five years (though rises are more likely over the next five years) while government appetite to introduce new legislation around energy efficiency is near zero. All these factors have also piled pressure on margins as firms fight to win the deals that do come to the market

Are there any rays of light amid such a bleak picture? One particular element of the market that continues to prosper is the energy performance contracting (EPC) segment. Focused almost exclusively on the public sector, the EPC framework is well tuned for public sector organisations who are typically cash strapped, carbon conscious and own buildings badly in need of upgrading. Recently signed multi million pound deals include a £4m project won by Imtech to undertake an energy infrastructure upgrade at Sheffield Children’s Hospital and a £5m energy centre project at Gloucestershire Royal Hospital won by Vital Energi.

Looking ahead, many services firms are wondering if this EPC gravy train will continue? How big can this market get and what is required to succeed? Is there any hope for the wider energy services market? We will explore these questions and many more in our upcoming refresh of the market size and forecast of the UK energy services market. If you are interested to know more or how we can help your firm, This email address is being protected from spambots. You need JavaScript enabled to view it..