Engaging the small and medium commercial building (SMCB) market in energy management tools and solutions has been a challenge. One reason is that the energy costs take up a relatively small proportion of energy costs for SMCB owners, compared to the massive energy bills in large commercial buildings. Another reason is the lower penetration rates of digital controls and building management systems. This is forcing major players to rethink how to pursue this market. Most traditional building energy management system (BEMS) vendors essentially scale down their BEMS offerings for SMCB customers looking for better performance out of lighting and heating, ventilation, and air conditioning (HVAC) systems.
A new crop of firms is engaging the SMCB market with a more lightweight offering, not focusing on the details of equipment performance. In early July, the electric utility Southern California Edison announced a partnership with FirstFuel Software to deliver rapid analysis for improved energy performance for medium-sized commercial buildings. Using meter data analysis and building characteristics, FirstFuel will identify efficiency opportunities for the more than 10,000 medium-sized commercial buildings in the utility’s service area. The FirstFuel system uses meter data in concert with general building characteristics to identify general building performance norms. Following this analysis, FirstFuel develops an ordered list of energy conservation measures. The direct partnership with the utility means that the best efficiency options will be available in real-time.
Breaking and Entering
The many pathways to engaging with the SMCB market will be interesting to watch. While there are certainly more SMCBs than large buildings, the level of interaction and number truck rolls will hamper success unless solutions providers can focus on easily deployable tools. Speaking of easily deployable tools, smart thermostat maker Nest (mentioned in a previous Navigant Research blog) is now getting into the SMCB market with an interesting strategy. Partnering with Direct Energy, Nest offers a smart thermostat that can be purchased and installed by SMCBs and used to ensure customers’ energy use is optimized so that they can receive the fixed power rates they signed up for. While this might seem like a gimmick to increase Direct Energy’s market share, it could help validate the value of efficiency management in a tough market.
And that market has potential. In Navigant Research’s Energy Management for Small and Medium Buildings report, it is forecast that the global SMCB BEMS market is expected to grow from $231.3 million in 2013 to $1.3 billion in 2022. Corporate commitments to reduce carbon and energy and a drive to reduce energy expenditures make the SMCB market ripe for BEMS vendors. Other drivers, like regional policies, the increased prevalence of green building certification, and the associated relevance of BEMSs, are growing as well. For owners and managers of SMCBs interested in energy management, the approaches will depend on their goals. Some will want fast, low-touch solutions, like FirstFuel’s technology, while others will want the full suite of BEMS services, like that of large energy management systems for commercial buildings. The dynamic BEMS market will be as diverse as its buildings, regardless of shape, or more importantly, size.