The Bureau of Energy Efficiency (BEE) has mandated ICRA for grading ESCOs (Energy Service Companies) in terms of their ability to conduct energy efficiency audits and implement energy-saving projects. As per BEE’s requirement, ICRA is required to grade ESCOs on three broad parameters – Track Record and Market Position, Organisational Risk and Financial Risk.
The grading of ESCOs is carried out on a five-point scale and communicated to BEE along with a detailed grading report, encompassing the scores assigned to each parameter. ICRA will deliver a grading report and letter to the entity. However, the same will only contain the overall grading without any scoring breakups.
The ESCO grading process involves seeking relevant data from the graded entities, besides engaging with their key personnel in technical, marketing and financial functions. Moreover, feedback is sought from the bankers and owner’s engineers and lender’s engineers (if applicable). Based on the accumulated data and interactions, the scores are assigned to the ESCO.