>INTRODUCTION TO THE BUSINESSES >
Energy Service Company (ESCO)
- What is the energy service company (ESCO) project?
- project wherein an energy service company (ESCO) invests in energy saving facilities when an energy user wants to replace or supplement the existing energy using facilities for energy saving and guarantees the energy saving effect derived from the facilities
Overview of the system
- This is a system that will enable energy users wishing to replace or supplement the existing energy using facilities to invest through energy service companies for efficient energy saving; the legal grounds for energy service companies were established through the energy use rationalization act in 1991; energy service companies have been registered and operated since 1992.
- Scope of projects to be implemented
- 1. Projects related to energy saving-type facilities investments
- 2. Management? service projects for energy saving of energy using facilities
- 3. Projects related to energy saving such as energy management, diagnosis, etc
- Legal grounds for activities
- 1. Article 25 of the energy use rationalization act (support for energy service companies)
- 2. Article 30 of the enforcement decree of said act (registration of energy service companies, etc.)
- 3. Article 24 of the enforcement decree of said act (application for registration as energy service company)
- Characteristics of energy service companies (when concluding a contract for outcome division)
- 1. Investment using the funds of a 3rd party
- 2. The initial investment costs needed to install energy saving facilities are procured by ESCOs.
- 3. Energy saving outcomes (saved amounts) are divided.
- 4. The cost savings resulting from the facilities investment are divided between the customer (user of
the energy saving facilities) and the energy service company.
- 5. When the investment cost of the energy service company has been completely collected, ownership
over the invested energy saving facilities shall be transferred to the customer.
- When investments are made by an energy service company
- 1. if the energy user has no capability to procure the investment cost, the initial investment cost is
procured through ESCO; the investment cost is reimbursed with the energy saving amount from the
invested energy saving facilities (method of outcome division agreement).
- 2. When an outcome guarantee agreement has been concluded, the energy user procures the initial
investment cost, and ESCO guarantees the amount of saved energy.
- 3. Professional services are provided for the energy saving facilities (design, purchase, construction,
post- management, warranty)
- 4. Since professional services are provided, the energy user is expected to save time, manpower, and
- 5. Pursuant to Article 25-2 of the special taxation case restriction act, an amount equal to 10/100 of the
amount invested in energy saving facilities shall be deducted from income taxes or corporate taxes
(amended on 2011.12.31).