**6. Conclusions**

The research problem of the study was to identify the determinants of the use of the ESCO mechanism by local governmen<sup>t</sup> units and enterprises implementing energy projects. The research conducted by the authors, which was also addressed to the Polish Ministry of Energy, provided a number of interesting observations and conclusions which enabled achieving the research objectives defined in the paper.

The first objective of the study was to determine the factors affecting the interest of Polish local governmen<sup>t</sup> units and enterprises in implementing energy projects in the ESCO mechanism. The research revealed that the lack of knowledge of local governmen<sup>t</sup> units and enterprises regarding the ESCO mechanism, although not unique to Poland, is not a sufficient explanation for the low interest in this solution. The problem is much more complex, and its sources should be sought first in the poor preparation of Polish local governments and enterprises for the energy transition, and second in the legislative and interpretational ambiguities that have grown around the ESCO mechanism. Theoretically, investors implementing energy projects should have full knowledge of the conditions and consequences of implementing these projects in different business models (e.g., grant, forgivable loan, credit, ESCO), but in practice, they often choose the simplest, most accessible or highly advertised solutions. For this reason, interest in grants, for example, far exceeds interest in the ESCO mechanism. In the case of EU funds, for example, the rules for project implementation and criteria for the eligibility of costs, as well as conditions for project accounting settlement and maintenance of its sustainability, are clearly and comprehensively defined, and access to advice on EU grants is widespread. The rules of accounting for investments in the ESCO mechanism are much more complex and individualised, depending on multiple factors. When a local governmen<sup>t</sup> or an enterprise is poorly informed regarding the technological solutions in the area of improving investment efficiency, the simplest solutions, generating the least risk, are usually selected. Thus, the first key conclusion to be drawn from this article is the need to educate local governments and enterprises in the field of energy efficiency, which is key to interesting them in the more complex ESCO implementation models. Such educational tasks should be primarily the responsibility of public institutions shaping the national energy policy, but also of the ESCOs themselves. The research confirmed that energy service companies pay particular attention to educating investors and offer them expert consulting during the planning and implementation stages of the project, but this is not always understood by local governments and enterprises. With regard to the results of the research, another important conclusion can be drawn—that the information addressed to investors to increase their knowledge regarding the ESCO mechanism should be formulated in terms of benefits and should be based on various examples of ESCO mechanism applications in investment projects by local governments and enterprises. While the Internet should remain the first source of information on ESCO for investors, the availability of expert consulting should be improved, and investors should be encouraged to commission professional energy audits as a first step in the planning process for energy projects. Meanwhile, investors often want to save on consulting and audits, not being aware that by following this path they lose the opportunity for a reliable analysis of different options for project implementation.

•

Expert consulting by ESCOs is also essential to provide investors with reliable and credible information on the terms and conditions of ESCO projects. As the research has shown, there are many stereotypical associations about the ESCO mechanism (e.g., the need to combine ESCO with a deep energy retrofit) or innovative elements that are not ye<sup>t</sup> trusted by investors (e.g., the method of settlement with the energy service company through an escrow account). The ESCO mechanism connected with a gran<sup>t</sup> also often raises questions from the perspective of state aid regulations, which are quite unclear. It seems that in spite of existing research and previously formulated recommendations, which are also referred to by the authors of this paper, solutions have still not been implemented to reduce barriers to the use of the ESCO mechanism, e.g., the development of model document specimens for conducting and accounting for EPC contracts, the establishment of nodal energy agencies, as well as the introduction of ESCO incentive mechanisms and financing schemes.

This last element, concerning the provision of funding sources for umbrella programs for the energy service companies, is considered by the authors as especially crucial for the further development of this market. The second research objective formulated in this study, i.e., the identification of business models in which it is possible to implement energy projects in the ESCO model in Poland, was highly related to determining:

	- Which target groups and types of projects are strategic in terms of marketing for the ESCOs?

By following the project implementation process in the ESCO mechanism, we can conclude that it generates risk primarily for the energy service company itself. For this reason, it is doubtful that energy service companies will invest the equity necessary to develop this challenging market. An ESCO generally relies on repayable capital from a preferential loan fund operated by state institutions. Since research has shown that the growth of the ESCO market is derived from the availability of public funds for the ESCOs servicing the contracts, a third important conclusion concerns the need for the state to provide adequate capital to such companies. The task of the energy service company is to effectively carry out the call for projects to be implemented in the ESCO mechanism and to service them in terms of finances, organisation and technology. It is in the interest of the state to create a competitive ESCO market that creates broad access to operators for the investors. However, it should be clearly emphasised that given the current perception of the novelty of the ESCO mechanism in the Polish energy market, the effective development of this market is possible only with the intensification of educational activities by state institutions and the professionalisation of the activities of ESCO companies. The amendment of the Act on energy efficiency and the activity of the Ministry of Climate to promote the ESCO mechanism should be evaluated positively.

According to the research, the new perspective for EU funds 2021–2027 will continue to allow local governments and enterprises to access grants for energy efficiency improvements, but in many cases, the conditions for obtaining grants may not meet all investor expectations. This results in an even greater necessity to promote hybrid financial engineering for projects that can combine, for example, the ESCO mechanism with grants and forgivable loans. However, this requires investors to be provided with expert advice on the planning and implementation of such projects while also giving them access to modern technological solutions offering a longer lifespan and greater savings in energy consumption.

A final element worth emphasising is the growing public awareness of the impact of industrial production and other human activities on climate change. Improving energy efficiency in the activities of public institutions or enterprises is an important element of the social communication of these organisations with their stakeholders. Energy projects that generate returns for investors while helping to mitigate the effects of climate change and prevent further change are increasingly socially desirable, and this is ye<sup>t</sup> another reason to promote the ESCO mechanism.

These conclusions of the research conducted on behalf of the Polish Ministry of Energy have been reviewed by a panel of experts. The panel included representatives from academia and business with knowledge of how the ESCO refundable financing mechanism works. The problem of public debt and EPC contracts in the public sector identified in the research has also been confirmed, as evidenced by the cited amendment to the Act on energy efficiency, which clarifies the situations whereby EPC contracts will not increase the level of public debt. Nevertheless, the research presented in this article has some limitations due to its methodology. These limitations relate to the national nature of the research (which is why the title emphasises that the article concerns Poland). In addition, it is necessary to take the dynamic nature of the international and domestic energy market into account (green deal, COVID, development of prosumer installations), which results in equally dynamic changes in the preferences of investors and the conditions for ESCOs. It should also be emphasised that the research was commissioned by the then Ministry of Energy, and the research problems addressed were in response to the needs of the said ministry. Nevertheless, the identified research gap-the limited number of national academic publications addressing the topic of ESCO projects, remains timely and inspiring.

As further directions of research regarding the ESCO mechanism, the authors point to the assessment of the importance of the ESCO mechanism in the transformation of the energy sector, in particular, research on the perception of the mechanism from the perspective of stakeholders and the further development of business models related to the ESCO mechanism–for example, in the context of changes in the conditions for applying for EU funds in the 2021–2027 period.

**Author Contributions:** Conceptualisation, J.K.-P. and G.K.; methodology, J.K.-P. and G.K.; validation, J.K.-P. and G.K.; formal analysis, J.K.-P. and G.K.; investigation, J.K.-P. and G.K.; resources, J.K.-P. and G.K.; writing—original draft preparation; writing—review and editing J.K.-P. and G.K.; visualisation, J.K.-P. and G.K.; supervision, J.K.-P. and G.K. All authors have read and agreed to the published version of the manuscript.

**Funding:** The authors based on the research conducted by them as a part of the study commissioned and funded by the Polish Ministry of Energy. The study was co-financed by the Cohesion Fund. The APC costs of the article was financed by Warsaw University of Technology, the cost of language proofreading by the WSB University.

**Institutional Review Board Statement:** Not applicable.

**Informed Consent Statement:** Not applicable.

**Conflicts of Interest:** The authors declare no conflict of interest.
