[en] Recently, US energy service companies (ESCOs) have begun to actively explore markets outside the US. Despite the needs of many countries for ESCO involvement, ESCOs face many challenges (i.e., marketing, financial, institutional, political and cultural barriers). Consequently, most of these firms pursue international project opportunities very selectively due to the costs and risks associated with project development. Despite these barriers, some ESCOs view international work as a strategic expansion of their business, assuming that there will be adequate business in the future to repay them for their initial investment. In this paper, the authors present the findings from a recently completed study on the proposed development of an ESCO industry in Japan. The study was based on four sources of information: (1) a review of the published and unpublished literature on ESCOs; (2) interviews with 26 ESCOs in the US, the US Department of Energy, and the National Association of Energy Service Companies (NAESCO); (3) ESCO presentations at the October 1996 NAESCO meeting; and (4) informal discussions with ESCO experts in the US. They believe that the lessons learned in this study can be transferred or applied to other countries interested in developing an ESCO industry. While energy prices have remained relatively stable over the last several years in Japan and energy capacity is not perceived as a near-term problem, other ''market drivers'' necessary for the emergence of a successful and vibrant ESCO industry exist in Japan. Despite the presence of these market drivers, significant barriers to the successful development of an ESCO industry exist in Japan