‘Demand pull’ government policies to support Product-Service System activity: the case of Energy Service Companies (ESCos) in the UK

Product-Service Systems (PSSs) constitute a family of service-based business models designed to satisfy societal needs in an economically and environmentally sustainable manner. To date however PSS has remained niche due to a variety of critical barriers. This paper explores how ‘demand ’ national government policies could support PSS activity by addressing these barriers and cultivating demand. Lessons are drawn from a case study of how regulatory, economic incentive, informative procurement policies have supported Energy Service Company (ESCo) activity in the UK; a sub-set of PSS family focused on energy service provision. Subsequently five policy recommendations are to support PSS activity: (1) balancing economic incentives and regulatory disincentives; (2) indirect policy support; (3) redesigning existing market structures; (4) promoting locally-led activity; and (5) creating stable policy frameworks. The paper warns however that national government cannot easily address all PSS barriers, such as customer preferences, international developments, progress and inherent business model weaknesses, pointing to the need for complementary solutions. Furthermore, other governance actors beside national government could implement PSS supporting policies.