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This paper investigates the energy service companies (ESCOs) in China from the perspective of technological capability (TC) development. The conventional capability development model of manufacturing in emerging economies has been adapted to examine the four dimensions of TC (investment, production, linkage and innovation) through a qualitative analysis of multiple case studies. Small and medium-sized private ESCOs can perform well based on investment and production capabilities to develop energy management software competence. Large state-owned ESCOs can develop more advanced linkage and innovation capabilities and serve large-scale businesses with more specialist services. For small and medium-sized ESCOs, competitiveness, customers and related business strategy are the primary drivers of TC development. These drivers are essential for large ESCOs, but government support and pressure are also important. The framework developed can be used to research ESCOs and other service providers in other developing countries. • Energy Service Companies have different levels of technological capabilities. • The development of these capabilities is driven mainly by internal factors. • The basic technology level depends on investment and production capabilities. • Development starts with the investment and production of simple technologies. • The advanced technology level requires linkage and innovation capabilities. [ABSTRACT FROM AUTHOR]