Energy Services Company (ESCO)
INVESTMENT OPPORTUNITY SCORECARD
ENERGY & WATER
November 2020
High Potential Moderate Potential Low Potential
ENERGY & WATER
Energy Services Company (ESCO)
OPPORTUNITY’S DESCRIPTION: Establishing an Energy Services Company (ESCO) to help reduce energy consumption for the public and private sector facilities
DEMAND INVESTMENT OVERVIEW
KSA MARKET SIZE, USD MN INVESTMENT HIGHLIGHTS VALUE PROPOSITION
KSA ranks 11th worldwide for annual electricity production and has third rank
Expected investment size of USD 2 Mn
for production per capita among the top 20 energy producers
~4.5% Opportunity to consider different operating models Government has established dedicated entities aimed at developing the Saudi
9 – pure private sector model or joint venture with Energy Efficiency sector: Saudi Energy Efficiency Center, Super ESCO, ESCO
8 local player Committee
Government has developed new regulations and energy standards to provide
5
91
99 Expected IRR 8%-12%
76 83 guidelines on Energy Efficiency Programs
64 70 The National Energy Services Company, “Tarshid” will stimulate the
development of the Energy Efficiency Industry in Saudi Arabia by providing
financial support to ESCOs
2020 2022 2024 2026 2028 2030 KSA government has established Saudi Energy Efficiency Center (SEEC) to
raise awareness among the households and businesses
KEY DEMAND DRIVERS MARKET OVERVIEW
Electricity consumption for MENA and GCC countries is
expected to grow rapidly owing to growing industrialization and MARKET READINESS AND COMPETITOR ANALYSIS GLOBAL TRENDS
rising populations There has been a significant increase in Energy Efficiency market Global ESCO Market size is estimated to reach USD
in the last three years 28.7 Bn by 2029 at a CAGR of 4.5%
The increasing cost of electricity across commercial and
Global market for energy efficiency investments
industrial buildings in KSA will lead to higher demand for COMPETITOR ANALYSIS reached USD 250 Bn in 2019 across the buildings,
Energy Efficiency solutions
Current players Potential Global & Local Players transport and industry sectors
Tarshid (Saudi Arabia's Super-ESCO) ensures consistent Energy Efficiency has been a key driver for decrease
supply of government projects that require energy efficiency in energy demand in Japan down to the level in
1990s
Over 257 K government buildings and over 3 M streetlight
Overall, China remains the largest market for Energy
poles will need retrofitting for Energy Efficiency solutions in
Efficiency investment and a major determinant of
KSA
global trends
2
ENERGY & WATER
Energy Services Company (ESCO)
ENABLING FACTORS
Saudi Energy Efficiency Center (SEEC) ENABLERS
A Unique Entity Responsible For The Energy Efficiency created by the KSA government to: Funding Energy Efficiency project development, and
Raise awareness across public and private sector to adopt Energy Efficiency solutions building capabilities of traditional ESCOs through
TARSHID
Design and provide mechanisms to address the public buildings energy efficiency (e.g. TARSHID initiative)
Provide regulatory framework and licensing; evaluation criteria for certification Well developed regulations and standards by Saudi
Government provides clear guidelines on Energy
Develop human capital (e.g. certifications and trainings)
Efficiency programs, such as the Energy Savings
Set measurement and verification plans to assess Energy Efficiency results Measurement and Verification (M&V) User guide
100% foreign direct ownership allowed
Eco System
Customers ESCO solutions COST OF DOING BUSINESS IN KSA
Implement projects Facilitate existing providers
for untapped public traditional ESCOs Factor Ranking Amongst Regional Peers
sector (e.g., hospitals, activity (e.g., capacity
schools, municipalities) building, financing) ESCO 1 Electricity tariffs for $48
industrial players /MWh
Public
ESCO 2 Productivity adjusted $3.3
wages /hour
Direct projects with untapped private sector (e.g., hospitals, Logistics
schools, hotels, etc..) Performance Index 3.2
ESCO n
Private (1 – 5)
Customs Clearance
Index 2.7
(1 – 5)
KEY STAKEHOLDERS
Ease of getting credit
(0 – 100) 50
Bottom Top Top Top 3
25% 75% 50% 25%
DEFINITIONS
# SCORECARD SECTION DEFINITIONS
Size of market in value/volume in KSA and/or Region (MENA/GCC) covering future projections based on available estimates
1 Market size
from published /government sources
2 Demand drivers A select number of factors that will influence future demand for the related product/service
An overview of key financial metrics summarizing the investment opportunity along with the expected return based on the
3 Investment highlights
suggested investment size
4 Value proposition Summary of key differentiators that position KSA as a strategic choice over other regional/global peers
5 Market readiness An overview of KSA market structure, market maturity and level of participation by local and global players
6 Competitor analysis List of the local & international players manufacturing the underlying product in Saudi Arabia and their market share
7 Global trends Latest business developments within the sector/product category
Ease of scaling the business across the value chain or into new adjacent products or geographies that would maximize the
8 Scalability and localization
opportunity’s investment returns and the ability and potential to locally manufacture the product and its components
An overview of the countries from which Saudi Arabia is importing the product and their value/volume and share in total
9 Import dependency
imports
10 Value chain analysis The process or activities that would potentially need to be carried out to deliver the underlying product or service
Government institutions, organizations, and/or authorities that participate or influence the market for the underlying
11 Key stakeholders
product/service
12 Enablers Factors that enable investment in the underlying opportunity
13 Cost of doing business in KSA Key factors that position KSA as a competitive destination for investment in the region
4
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