Energy service companies as transition intermediaries: Functions, business models, and prospects for demand-side decarbonization

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Energy service companies (ESCOs) are established delivery vehicles for energy efficiency, but the literature remains fragmented across contract studies, country surveys, financing analyses and emerging digital-service research. This fragmentation leaves a specific knowledge gap: how ESCOs combine technical, financial, contractual, data and institutional functions to act as transition intermediaries, and under what conditions those functions generate additional, persistent and scalable demand-side decarbonization. This structured narrative review synthesizes 129 peer-reviewed and institutional sources published mainly between 2010 and 2026. It develops a transition-intermediary framework, compares contractual and organizational models, proposes a common quantitative performance scorecard, and links ESCO market development to policy, finance, technology, risk allocation and client capability. The evidence indicates that ESCO projects reported average energy savings of about 25% in 2024, while U.S. federal projects delivered reported cost savings equal to 101.0% of estimates and 108.5% of guarantees. These benchmarks demonstrate performance potential but do not support a universal ranking of shared savings, guaranteed savings, Super ESCO and energy-as-a-service models because contract choice is endogenous to client credit, technology mix, project depth and market maturity. The review further shows that ESCO opportunities extend to electrification, distributed energy resources, storage, demand response, flexibility, digital twins, artificial intelligence and carbon MRV. However, transaction costs, baseline disputes, shallow-retrofit incentives, long-term lock-in, data dependence and exclusion of less creditworthy clients can weaken outcomes. We conclude that ESCOs should be evaluated as institutional infrastructure for demand-side implementation rather than as a narrow retrofit industry. A future agenda is organized into five macro-areas and nine linked priorities spanning evidence, market design, contracts, digitalization, system integration and justice.