BOULDER, Colo. — Consolidation in the energy service company (ESCO) market is expected to continue through the remainder of this decade, as highly competitive players aim to increase market share, resulting in an industry structure concentrated to a large extent in a group of very large companies focused on serving the federal government, according to a new report from Pike Research.

The ESCO market, which is comprised of companies that provide end-to-end efficiency measures through the use of performance contracts, exceeded $5 billion in revenues in 2011, noted Pike Research. Driven by public policies that encourage greater emphasis on energy efficiency, this market is forecast to grow faster than the domestic economy and reach at least $13 billion in sales by 2020.

“In some respects, the rapid rise of mergers and acquisitions in the ESCO industry over the past decade is similar to the intense consolidation of many smaller electric and gas utilities at the start of the 20th century,” said research analyst Brittany Gibson. “However, the utility mergers generally resulted in the creation of mid-to-large territorial monopolies, sanctioned and institutionalized by a regulatory structure meant to protect the public interest. In contrast, the consolidation of ESCOs has resulted in an unregulated but highly structured tier of companies pursuing business in national or regional markets.”