A comparative study on energy service policy development and effectiveness in China and United States

The prominence of Energy Performance Contracting (EPC) has grown particularly dramatically in recent years, prompting countries to enact policies aimed at fostering wider EPC adoption and backing up the growth of Energy Service Companies (ESCOs). However, the effectiveness of these overarching policies and their varied policy instruments remains a topic of uncertainty. This study aims to design an analytical framework for evaluating EPC policy power and examine the effectiveness of different policy instruments to ESCO industry growth through empirical analysis, focusing on China and the United States—two leading ESCO markets. Comparative analysis was conducted in three development periods based on the results of quantitative analysis of policy power. Multiple linear regression and ARDL model are applied to examine how policy power influences ESCO industry growth in both countries, followed by the use of the LMG method to evaluate the relative importance of selected drivers. The findings underscore the preeminent role of policy promotion in propelling the development of the ESCO industry in both countries. Additionally, the LMG technique is employed to assess the individual contribution of command-and-control (CAC), economic incentive (EI), and exhortatory instruments (EXI) in shaping industry outcomes. The impact of these policy types on the ESCO industry varies significantly, with EXI exerted most pronounced impact in China and CAC in US. In terms of the results, suggestions are proposed for policymakers to effectively promote ESCO development. • Evolution and power of ESCO policies in China and US are reviewed and evaluated. • Similarities and differences of policy patterns are identified across three periods. • Policy drives ESCO industry growth in China and the US, with differing short- and long-term effects. • Impact of different policy instruments on the ESCO industry varies significantly.