Catalysing the energy service market: The role of intermediaries. (November 2016)

• Record Type: Journal Article
• Authors: Nolden, Colin; Sorrell, Steve; Polzin, Friedemann
• Is Part Of: Energy policy. Volume 98(2016)
• Page Start: 420
• Page End: 430
• Publication Date: 2016-11
• Subjects: Energy service contracts -- Intermediaries -- Transaction costs -- Public procurement frameworks; Energy policy -- Periodicals; Politique énergétique -- Périodiques; Electronic journals; 333.79
• DOI: 10.1016/j.enpol.2016.08.041
• Languages: English
• ISSNs: 0301-4215

Abstract

Abstract: The UK market for energy service contracts is expanding, owing in part to the emergence of intermediaries for those contracts in different parts of the public sector. These intermediaries combine a legal framework for establishing contracts with an organisational framework that facilitates contract negotiation and execution. This paper examines the nature and operation of these intermediaries in more detail, including their achievements to date and their similarities and differences. It uses ideas from transaction cost economics to develop a theoretical model of the contracting decision and shows how intermediary organisations can lower the transaction costs incurred by both clients and contractors, thereby increasing the viability of contracting. The paper argues that intermediaries can play an important role in expanding the market for energy service contracts, and hence in delivering cost-effective energy efficiency improvements throughout the public sector. Highlights: Intermediary organisations are playing a growing role in the energy service market. Intermediaries lower transaction costs for both clients and contractors. Intermediaries should be encouraged by public policy.