Both building energy management systems (BEMS) and enterprise energy management (EEM) have major roles to play in delivering distributed energy and demand response services.
Together, these two technologies can reach across various applications to better connect buildings, energy markets and the physical grid.
Integrating the technical services in buildings is not a new development. But more recently, advances in technology -- along with the need to reduce CO2 emissions -- has opened up new business opportunities. Memoori’s new research report, The Market for BEMS and EEM: 2013 to 2017, seeks to establish how these opportunities will develop and offer better returns for customers.
There is no doubt that through alliance, acquisition and integration, these two separate businesses will play a vital role in maximizing energy conservation in buildings while generating income and reducing operating costs.
BEMS Market Sizing Data and Business Development
We estimate that global sales of BEMS at installed prices totaled $15.6 billion in 2012, and we forecast that by 2017 it will have reached $23 billion. The figures are based on the total installed value and include all controllers, valve actuators and sensors, and supervisory software.
The largest market is North America with a share of 23 percent, followed by Europe at 20 percent.
Demand in North America and the EU declined in 2007 and 2008 as the construction of new buildings declined. However, the BEMS market in North America returned to growth in 2012, and the EU is forecast to stabilize in 2013 and then return to growth in 2014. Asia will deliver the highest rates of growth. China and India are the fastest-growing markets and they are expected to sustain current growth rates of around 18 percent through 2017. Latin America and the Middle East are forecast to grow at a compound annual rate of 8 percent from 2013 to 2017.
This business is well established and dominated by four major companies. But the channels of distribution have changed over time, bringing better opportunities for the smaller players alongside the reduction in direct sales.
Open systems are putting supervisory software developed and maintained by BEMS companies under pressure from outside sources, and the medium-sized players are struggling to keep up to date. Software is not their strength. But the major challenge for BEMS suppliers is that their business is morphing into the much wider enterprise energy management (EEM) business, and at the same time interfacing with smart grid applications. They need to accommodate this.
EEM Market Sizing Data and Business Development
The two major goals of the enterprise energy management business are to make smart buildings much smarter and to leverage automated demand response by providing real-time analysis of supply and demand. These two markets alone have the potential to generate upwards of $225 billion in activity by 2030. The U.S. market for EEM solutions is estimated to be $6 billion in 2012 and could grow to $15 billion by 2020.
The last decade has seen EEM develop from a specific energy-domain service delivering data aggregation into an enterprise-scale service providing cost reduction and energy efficiency applications in smart buildings. The more sophisticated software package can deliver optimal energy solutions across all facets of energy supply, consumption, conservation and total emissions control in single buildings, multiple buildings, and multiple sites, even across different countries.
Growth is being driven by the need to meet CO2 emissions standards in the low-carbon economy, and large multinational corporations are looking for an enterprise view of energy use and associated costs across multiple facilities. This is not a one-size-fits-all solution, as vertical markets categorized by building type have different needs and priorities.
We therefore expect that the smart building sub-markets will be targeted by type of vertical building. However, EEM companies need to be able take the data from BEMS, and this is where they will need to extract and join data from different communication protocols.
Fundamental Structural Changes Are Underway
Leading BEMS companies have massive heritage estates and are among the world’s major energy service companies (ESCOs). They are therefore in a strong position to help EEM suppliers get a foothold in the smart building market. However, BEMS suppliers and ESCOs are also intent on taking a piece of the EEM business.
Although not particularly well known for their prowess in EEM, these players have been acquiring companies with this expertise for the last five years. BEMS firms and ESCOs active here include Johnson Controls, Honeywell, Schneider Electric, Siemens and ABB. They are the world’s leading suppliers across both businesses, and the latter three are also leading international suppliers of smart grid products and services.
At this time, they don’t have the software technology to build platforms for major projects. But Schneider Electric recently signed a strategic technology agreement with one of the world’s major software companies, OSIsoft. OSIsoft will provide the technology for the management of real-time data, while Schneider Electric will provide comprehensive energy management control.
The major EEM companies have the capacity and capability to deal directly with the owners of very large smart-building portfolios, and they will have contact with sources that will influence the buying decision on EEM purchases. These companies will be targeting comprehensive EEM systems in smart buildings.
EEM will usher in a drastic evolutionary change within the building services and management business, as buyers require a high level of commercial and technological expertise that is not yet possessed by many of the suppliers. Acquiring these skills will demand the development of alliances and partnerships between the various groups of players and across the vertical markets. Those that grasp the opportunity will be rewarded with a highly profitable and fast-growing business.
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Jim McHale founded Memoori in 2008. It is a consultancy based in London that provides market research, business intelligence and financial deal tracking services to clients across several industries.
More details on Memoori’s BEMS report can be found here.