It’s been an important year for the smart buildings market in the United States, and recent trends suggest increasing momentum in near-term technology adoption. Vendors are making waves on two fronts: innovative financing options have been introduced to lower upfront costs to customers; and vendors are finding ways to scale smart building solutions to the small and medium business (SMB) segment – a critical move toward substantial market penetration.
Less Money Down
Finding the cash is often the biggest challenge to smart building investment for today’s early adopters. Innovative technologies provide a rapid payback coupled with valuable, yet hard-to-quantify operational efficiencies. But many customers just don’t have the capital for new hardware and systems to develop smart buildings. Noesis Energy and Daintree Networks provide two examples of cost-effective alternatives to traditional energy efficiency and smart building investment.
This year Noesis Energy announced a new $30 million investment fund to support a shared savings approach to smart building investment. Customers can access $300,000 to $1 million to finance their smart building development projects and repay the financing through the energy savings realized on their monthly utility bills. This approach mimics the traditional energy performance contracting models that have been common in public sector energy efficiency projects for years.
More recently, Daintree Networks announced a new subscription model for energy management, which helps customers take advantage of smart buildings technology with a monthly fee instead of hefty upfront capital costs. Daintree’s Building Energy Management as a Service provides a cloud-based application of the company’s ControlScope software. This subscription model has been adopted by U.S. smart building analytics startups to shift a capital cost that may derail investment into an operational cost that fuels innovation and efficiency.
Watch for new research on smart building financing in Navigant Research’s report, Energy Services Companies, scheduled for publication in 1Q 2015.
On the Small Side
According to Navigant Research’s report, Energy Management for Small and Medium Buildings, investment in the SMB sector is expected to surpass $1 billion by 2022. The opportunities in this sector are critical for the future of smart buildings because SMBs represents the largest portion of the overall building stock.
Vendors have honed in on opportunities to engage larger organizations with portfolios of smaller buildings. These projects represent a proving ground for solution scalability. GridPoint, for example, has showcased performance in retail and fast serve restaurants. Last month, GridPoint announced that it has helped the retail chain VF Outlet achieve an average energy savings of 26% across the portfolio since 2012. When you bring this level of savings to a portfolio of facilities, it creates a compelling business case. It’s evident the market players – from startups to major players – see the need to tackle SMBs. In early January, EnerNOC announced it had acquired Pulse Energy as a means of expanding its offerings to service all commercial and industrial customers.