What Siemens and Walmart know about ESCOs
A younger crop of energy service companies installs batteries and software systems to boost customers' energy cost savings. Read More

Commercial building operators looking for energy service providers to help them cut their power usage, save money on their utility bills and reach sustainability goals, have a widening range of options.
Longtime providers of energy-efficient building technologies, such as Siemens, Schneider Electric and Ameresco, still dominate the energy-services market.
But a newer crop of companies offer energy storage and grid related services that potentially can cut energy costs even more. Batteries and other devices help limit the amount of electricity the building must buy from the local utility and with energy management systems, can shift the building’s power usage footprint at different times of day to obtain financial rewards from the grid operator.
U.S. energy service companies (ESCOs) are on track to generate about $7.6 billion in revenue this year, up 15 percent from 2016, according to a recent report by Navigant.
ESCOs develop, design, build and finance projects that save energy and reduce energy costs at customer facilities. Most of them do this through an energy performance contract they sign with the customer, which the project to generate actual energy cost savings in order for the provider to get paid.
The customer usually does not pay up front, but instead pays for the equipment and services through the contract payments which, together with their utility bills, should be less than what they were paying their utility before.
In a recent example, Siemens worked with Gulf Power to install energy and water conservation upgrades at 58 facilities at Naval Air Station Whiting Field in Milton, Florida, under a $10 million energy savings contract with the government. The 13-month project included more than 10,000 LED light fixtures, high-efficiency HVAC equipment upgrades, low-flow water fixtures, transformer replacements and building control systems upgrades that together are estimated to save the air station $500,000 a year.
What does a commercial property owner do after they’ve upgraded the equipment in their buildings, but they still want more savings?
Enter energy storage providers such as Advanced Microgrid Solutions (AMS) and Green Charge.
Walmart signed a contract with AMS earlier this year to design, install and operate advanced energy storage systems at Walmart stores to boost efficiency, guarantee energy savings and provide grid support to the local utility, at no upfront cost to Walmart. AMS will install 40 megawatt-hours of batteries at 27 Walmart stores in southern California. The batteries will provide extra power to the stores, when it is needed to avoid using too much utility power and incurring extra charges.
AMS also has a contract with Walmart’s local utility, Southern California Edison, that agrees to provide immediate reductions in power usage on the grid at times when demand for electricity is high, such as in late afternoon and early evening, but when supplies are tight. AMS can offer SoCal Edison power reductions from Walmart and its other customers, such as Irvine Co., that host similar battery arrays at other times, to solve different grid issues, which increases the revenues that AMS and its customers can obtain by automatically switching on the batteries to decrease their use of power from the grid.
“The energy services company today has to be able to manage very complex distributed energy resources [and] their interaction with each other, in order to create the financial benefit to the end-use customer,” AMS Chief Executive Susan Kennedy said. In addition to managing multiple distributed energy resources to create energy savings for the customer, the new goal is to create grid products that the customer can use to monetize their on-site batteries, she added.
AMS and its customers are not allowed to discharge excess power from the batteries directly onto the grid because of current regulations. If and when those policies change, companies with on-site battery storage will have another way to generate revenue by sharing their excess power with the grid, she said.
Macquarie Capital and CIT Bank are financing several AMS battery projects in the Los Angeles area.
More than 6.5 megawatts of energy storage devices — mostly batteries — were installed at U.S. commercial and other non-residential properties in the third quarter of this year, a record amount for the sector, according to a December report by GTM. More than 95 percent of those projects were in California, which offers rebates, called Self-Generation Incentives, to help offset the cost of the batteries.
The larger ESCOs are taking notice and some have acquired smaller upstarts. For example, Engie bought a majority stake in energy storage expert Green Charge last year, and earlier this year bought OpTerra, another small ESCO. Also this year, Wartsilla bought Greensmith Energy Management Systems, and Italian energy giant Enel bought ESCOs Enernoc and energy storage expert Demand Energy.
Green Charge, a unit of Engie, recently reached a deal with indoor skydiving firm iFLY to install 1 megawatt-hour battery storage systems at the company’s San Diego and Los Angeles-area facilities. Having the batteries and energy management software will allow the skydiving company to save $1.5 million on reduced utility charges over the term of the contract, according to Green Charge.
Green Charge said it doesn’t get paid unless the system provides power cost savings that it shares with the customer.
