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Energy service collaborations—it is a question of trust

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Abstract

Energy services have been highlighted both in European Union directives and in academic literature as an important tool to increase energy efficiency. Performance-based energy services, i.e., outsourcing energy management in performance-based remuneration contracts, is said to overcome many of the barriers that have been used to explain the energy efficiency gap. Energy service companies (ESCOs) help organizations to implement energy-efficient solutions in order to reduce energy costs. By combining science and technology studies (STS) analysis and economics in an interview study of firms, the paper contributes insights on the relational nature of energy service collaborations. The objective of the study is to describe how knowledge and incentives affect trust between partners in performance-remunerated energy service collaborations. Performance-based remuneration is one aspect that makes energy service contracts complex. On the one hand, risk is recognized as an important barrier to energy efficiency. Since remuneration to ESCOs is based on energy savings, they also share the financial and technical project risk with their clients. On the other hand, performance-based remuneration can create a lack of trust. Performance is measured in calculations made by the ESCO, calculations that demand expertise that client firms do not possess. ESCOs are consulted for their knowledge on energy efficiency and therefore an imbalance of knowledge is in the nature of energy service collaborations. The paper concludes that if the initial doubt is overcome, long-term collaborations can be advantageous for both parties, since this builds trust and generates long-term profits.

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Notes

  1. There are attempts to standardize methods, for example the International Performance Measurement and Verification Protocol.

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Acknowledgments

The paper was written as a part of the Energy System Programme, financed by the Swedish Energy Agency. We kindly thank Jenny Palm and Patrik Thollander, our supervisors, for valuable input and taking the time to read and comment during the work process. We are also grateful for comments from the seminar group TEVS (Technology, Everyday Life, Society) at the Department of Thematic Studies, Technology and Social Change. The authors also thank also to Sarah Broberg, Roman Hackl, and Viktor Andersson for taking the time to read and comment and finally we would like to thank our reviewers who helped improve the paper.

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Authors and Affiliations

  1. Department of Management and Engineering, Division of Energy Systems, Linköping University, Linköping, Sweden

    Sandra Backlund

  2. Department of Thematic Studies, Technology and Social Change, Linköping University, Linköping, Sweden

    Maria Eidenskog

Authors
  1. Sandra Backlund
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  2. Maria Eidenskog
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Corresponding author

Correspondence to Sandra Backlund.

Appendix

Appendix

Interview guide

Background questions

  • What is your name, background and your position in the company?

  • Tell me about the company! Topics: organization, history, production process and energy use.

The company’s use of energy services

  • How long has your latest energy service collaboration been going on?

  • What kind of services have been used?

  • Tell me about the first stages of the process

  • How did this collaboration get started?

  • Where did you find information?

  • How did you experience the work with the external consultants?

  • Did you have any contact with the Swedish Energy Agency?

  • Did you evaluate the first results?

  • How much did your company and the ESCO invest in the collaboration?

  • What is your expected pay-off for your investments?

  • Who in the organization makes the decisions about your investments and the energy service collaboration?

  • How did the collaboration work?

  • Were there any problems in the collaboration?

  • How often do you meet with the ESCO? Who is present at the meetings?

  • What changed after the collaboration?

    • In the production process?

    • In the supporting processes?

    • In habits of the employees?

    • Awareness of energy efficiency?

  • How do you work with energy efficiency today?

  • What do you see as the largest advantages and disadvantages with energy services?

  • Do you receive the support you need from other parts of the organization?

    • How involved are the board/company group board?

    • How involved are other employees?

  • What does it mean to work with environmental issues and energy efficiency for your company?

  • Why is energy efficiency important?

  • What is the company’s responsibilities when it comes to

    • Energy efficiency?

    • Environmental issues?

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Backlund, S., Eidenskog, M. Energy service collaborations—it is a question of trust. Energy Efficiency 6, 511–521 (2013). https://doi.org/10.1007/s12053-012-9189-z

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