**1. Introduction**

Energy efficiency (EE) plays an essential role in accelerating clean energy transitions and achieving global climate and sustainability goals [1,2]. Therefore, it has an important place in the public policy agenda of most developed countries as they make grea<sup>t</sup> efforts to reduce energy consumption through climate and energy policies, programmes and targets [3,4].

In terms of EE, we have a related energy service company (ESCO) formula which is a solution that considers both energy technologies and the sharing of technological, financial and legal risks [5]. In literature, the acronym ESCO refers both to specialised companies [6] known as ESCOs and to a business model [5]. Reference to ESCO is also made in literature

**Citation:** Kurowska-Pysz, J.; Kunikowski, G. The ESCO Formula as Support for Public and Commercial Energy Projects in Poland. *Energies* **2021**, *14*, 8098. https://doi.org/10.3390/en14238098

Academic Editor: Vincenzo Bianco

Received: 25 October 2021 Accepted: 1 December 2021 Published: 3 December 2021

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to describe an EE project delivery model. In addition to the above-mentioned options there are alternatives such as public–private partnership (PPP) and energy performance contracts (EPC) which provide other procurement models [7]. For the purpose of this research paper, we use a broader definition of the ESCO formula that encompasses all of the meanings above (hereafter ESCO or ESCO formula) and we refer to a model of investment financing mechanism using EPC contracts with the participation of a specialised company.

The value of the global ESCO market was estimated at USD 28.6 billion in 2017 [8] while the European ESCO market was in the region of USD 2.7 billion in 2015 [3,9]. According to ESCO market development research [10], the Polish market experienced a slow increase in the period 2015–2018. In 2020, there were 20 companies registered as energy service providers [11].

For local governmen<sup>t</sup> units, the spending of funds under the operational programs of individual voivodeships is a priority.

A detailed description of the priority axes clearly indicates that in the thermo-modernisation of public utility and residential buildings, the reduction of low emissions and energy-saving outdoor lighting (streets, parks, squares), there is a preference for investments carried out using the ESCO formula as can been seen in the Mazowieckie Voivodeship [12]. The same is true for other voivodeships.

Therefore, the implementation of investments using the ESCO formula means the applicant is given preference. This preference confirms that the voivodeship authorities in Poland took the ESCO formula into account when preparing the rules for spending EU funds. Currently, the use of the ESCO formula facilitates the financing of the investment.

The main barrier to the ESCO market in Poland is that the legal framework is still ambiguous, and further review is seen as necessary by market actors. In addition, a lack of trust is distressing the market due to the scarcity of appropriate financing and lack of good examples to counterbalance the ample information about bad examples. Transaction costs are high as a result, and energy prices are relatively low [10].

Several studies have analysed the drivers and barriers of the ESCO market and the use of ESCO in general [9,13,14] and in the public domain [5,15,16].

The risk of projects implemented using the ESCO formula has also been described in literature [14,17–19]. Barrier assessments and recommendations for Poland are general [20–22] and formulated as part of international comparative analyses. In our opinion, due to the growing importance of local energy projects, these barriers require in-depth study.

This research paper aims to recognise the conditions necessary to apply the ESCO formula as a solution to support local governmen<sup>t</sup> units and enterprises in the field of energy industry project development and implementation in Poland. The authors also defined three sub-goals related to:


To solve the research problem, the research questions were formulated, and the following issues were analysed: the reasons for interest in the ESCO formula and the sources of knowledge about its solution; activities and other factors that can increase or decrease interest in the ESCO formula; services in terms of the ESCO formula implementation; the attractiveness of different instruments for financing energy industry projects and the benefits resulting from using this formula, as well as the influence of current and future target groups on ESCO formula development in Poland. Growing interest in public and commercial energy projects using EU funds in 2021–2027 is also a driving force. Investment is typically financed by subsidies and either private funds or a commercial loan and private funds. This approach increases long-term debt, thus limiting interest from public sector investors. An equally important challenge is the technical knowledge about energy efficiency

and the risk involved in maintaining energy parameters. Using the ESCO formula, expert knowledge is not required from the investor. Similarly, the risk is transferred to the ESCO, which guarantees and accounts for energy effects through EPC contracts. Poland needs to make use of the ESCO formula because traditional and more widespread investment financing models, those based on subsidies for example, can no longer be maintained (European funds are shrinking). Moreover, investments that are considered likely to produce returns should slowly move away from public funds. The third reason is that some local governmen<sup>t</sup> units and enterprises do not have funds necessary to contribute to EU projects or projects based on redeemable loans. Therefore, the support of ESCOs is an alternative model for implementing such projects.

Basing on a triangulation of research methods [23], the research problem was solved using empirical qualitative research (desk research analysis, in-depth individual interviews, computer assisted web interview (CAWI) survey, focus group interviews), as well as one of the foresight methods (an expert panel).

The study was undertaken with the agreemen<sup>t</sup> of the Polish Ministry of Energy [24], which commissioned and funded the research.

The remainder of the paper is organised as follows: in Section 2, we present the literature review. In the Section 3, research methods and the design of the empirical research are outlined. In Section 4, we present the results. Section 5 provides a discussion and presents the limitations of our study. Finally, the paper ends with Section 6, where we present our conclusions and recommendations.

The article's novelty is to examine the assessments of the ESCO formula in Poland from the perspective of stakeholders representing the public and commercial sectors. The publications describing the current problems of Poland are international comparative analyses. Publications on ESCO in Poland are from the beginning of the 21st century and there have been very few since 2010. This article presents the results of current empirical research in which various points of view of enterprises and local governmen<sup>t</sup> units were examined on the basis of a triangulation of research methods.
