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Energy And Resources
The Global Market for Energy Management Information Systems
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REPORT HIGHLIGHTS
- EMIS systems began at approximately $10.4 billion in 2003 and rose to approximately $14.2 billion in 2005, an increase of 36.5%. EMIS systems revenue rose to $17.6 billion in 2006, an increase of 26.9%.
- According to revenue increase projections as stated by reporting companies and calculated using standard statistical forecasting methods, EMIS system revenues will reach $22.9 billion by 2011, representing a average annual growth rate (AAGR) of 5.4% from 2006 to 2011.
- EMIS service revenues began at approximately $10.7 billion in 2003 and rose to approximately $16.0 billion in 2006. EMIS service revenues will reach $24.5 billion by 2011, representing a average annual growth rate (AAGR) of 8.9%.
SUMMARY FIGURE
EMIS SYSTEM OVERVIEW
Source: BCC Research
REPORT SCOPE
INTRODUCTION
Energy management refers to the management of energy consumption. This means improving the efficiency of powered devices, such as electrical equipment or vehicles, and the development of renewable energies.
Multiple commercial companies offer specific product offerings that include the term “EMIS” (energy management information system[s]) or “EEM” (enterprise energy management), although the specific details of the products differ widely between companies. In addition, educational institutions offer a variety of energy management degrees, some offering EMIS or EEM certification programs, although definitions between institutions vary. The overall concept of computer-enabled energy management is quite large, and whether organizations refer to them as EEM, EMIS, or variations of energy efficiency improvement systems or power management procedures, we will refer to this larger concept as EMIS for the duration of this report.
EMIS solutions are applicable for commercial, governmental, and nonprofit companies in virtually every industry, although some industries fundamentally use more power and have a greater need for EMIS solutions, such as manufacturing operations and datacenters. There are many reasons for employing formalized energy management, including identifying and eliminating inefficiencies, saving revenue through energy efficiency best practices, participating in various governmental and private incentive programs, increasing the longevity of finite energy resources, and facilitating certifiable adherence to energy management standards proposed by the ISO (International Organization for Standardization) and other standards organizations.
Although formalized EMIS solutions are not directly applicable for private consumers, such as homeowners, historical analysis and decision support to enhance energy efficiency of EMIS are frequently accessible through the EMIS solutions employed by power providers. These power providers enable consumers to become more informed and more efficient by providing historical and current power usage or appliance-specific utility-usage data. Current data analysis tools, such as data warehouse technology and other computing practices, allow power providers to provide consumer power consumption data periodically and on demand with the ability to secure other consumer information, or to group the data in an endless variety of ways.
The technology-driven global economy has forced companies to become more lean and responsive in their operations, and to identify and eliminate inefficiencies in every operational and infrastructure area. EMIS is an interesting growth field that includes ultra-conservative business leaders who wish to optimize corporate performance in order to maximize operational efficiencies, as well as ultra-liberal environmentalists who are intent on reducing pollution caused by traditional energy production and consumption by making alternative energy more viable through wider commercialization or incentive programs.
With untenably high oil prices increasing operational costs for private and organizational consumers alike, it is imperative for businesses to control soaring energy costs in order to retain or regain profitability. In addition, savvy leaders in every business sphere recognize the dangers of over-dependence on conventional fuel supplies that may be unexpectedly disrupted due to political or environmental events or policies.
Energy management practices, referred to with a variety of different terminology in business, governmental, and industrial sectors, all lead to the end goals of identifying and eliminating inefficiencies, realizing significant energy cost savings, adopting best-business practices, adhering to better environmental policies, and the ultimate bottom line of increasing profitability. Individually scrutinized, EMIS and EEM programs, and other specific energy management programs around the world have different architectural, implementation, and outcome details, but all share the same core elements, conceptually. For clarity, all formalized computer-enabled energy management systems will be referred to as EMIS in this report.
There are many drivers for the EMIS market. Some of these drivers are regulatory with international efforts to reduce greenhouse gas emissions, such as the United Nations Framework Convention on Climate Change (UNFCCC). The UN hosts these conventions periodically, and representatives from multiple nations around the world discuss, establish and negotiate emissions-reduction goals, and how they will be structured for world nations considered to be at different developmental levels. This convention has divided the world’s countries into three categories: Annex I, Annex II, and Developing.
Annex I countries are industrialized countries, Annex II countries are developed countries which pay for the costs of developing countries, and developing countries are not yet fully industrialized, and so are not expected to be able to commit the financial resources to adhere to the guidelines of the UNFCCC. The UNFCCC is an international environmental treaty originally intended to set guidelines without mandates for emissions limitations. Instead of mandates, the treaty was designed to periodically negotiate updated provisions, referred to as “protocols.” Perhaps the most well-known protocol to emerge from the UNFCCC is the Kyoto Protocol, which we will discuss in detail.
Additional regulatory drivers for EMIS implementation include the ISO 14000 family of regulations. According to self-reported figures from the ISO, over 750,000 companies worldwide have adopted ISO 14000 standards for their organizations. ISO 14000 primarily relates to the implementation of environmental management practices, which include minimizing harmful effects on the environment and adopting practices that continually improve environmental performance. Energy management is clearly an area that is imperative in order for a company to achieve these goals, and for most companies, implementation of a formalized EMIS system plays an essential role in their overall energy management strategy.
The monumental effect that continually rising oil prices has had on virtually every industry is another significant driver for the EMIS market. There are few industries that do not have to consider oil prices in some aspect of their operations, whether for transportation of their goods, or for infrastructure operations in their buildings — from HVAC to lighting to computer networks and large datacenters.
While smaller operations may be encountering a smaller economic impact because of steeply rising fuel prices, their profit margins are more significantly affected because they are already competing against larger corporations and cannot simply pass the increased costs along to the customer without risking serious sales losses. Larger operations that expend millions in energy costs have been the early implementers of formalized EMIS programs.
There are many steps involved in EMIS implementation, and before these implementation plans are started, some consideration should be made for cost-justification of the EMIS. Some nonprofit and private organizations in the U.S. and abroad offer EMIS needs-analysis services that include evaluation of historical and current energy usage, business process analysis, and target setting. These services generally deliver a set of recommendations for appropriate EMIS implementation that fits the specific needs of the organization.
Energy service companies (ESCOs) offer many energy-related services, including scalable EMIS solutions to companies in a variety of industries. In general, EMIS solutions are offered to energy producers and distributors, industrial companies, business entities, and private consumers. Within each of these very broad categories are multiple smaller segments, each with its own specific energy needs. We will discuss several smaller subcategories of energy consumer companies, including datacenters, which are centralized or distributed computing centers that store, manage, and disseminate information pertaining to a particular business or other organization.
Depending on the scale of the definition of “datacenter,” every business operating any type of computer network has a datacenter, because by its nature, a server center fulfills the purpose of a datacenter. Datacenters have particular power needs, because performance reliability, disaster recovery and data redundancy have to all be weighed against unnecessary expenditure of energy as part of the energy management process.
This report will explore the international market, economics, and technology of the EMIS industry from all business perspectives, including regulatory and policy drivers, EMIS system and service providers, and EMIS consumer companies in a variety of business and industrial sectors, including datacenters, industrial manufacturers, and implementation details for better energy management practices.
STUDY GOALS AND OBJECTIVES
BCC Research’s goal in conducting this study was to provide comprehensive information about the energy management market, and in particular, the EMIS market. Rather than present the EMIS market in isolation, it was essential to present a holistic picture of how energy issues connect with and impact every industry — from small localized businesses to international conglomerates. One particular goal of this study was to collect and analyze information on EMIS solutions in order to provide business analysts and industry leaders with the essential information to allow them to make informed, intelligent EMIS implementation decisions.
REASONS FOR DOING THE STUDY
EMIS is a timely topic for a number of reasons. Dramatically increasing fuel prices, global political and policy factors, as well as local, national, and international energy management policies and practices, and the absolute need for companies to control costs and not let costs control the company are all factors that contribute to making EMIS solution implementation one of the most essential strategic considerations for virtually every company in operation. The UN, OECD (Organization of Economic Cooperation and Development), ISO, and other international organizations have set policies and standards that mandate active energy management for more than 750,000 companies worldwide. Whether primarily for energy cost control or for emissions reductions, it is not a question of ‘if’ a company should implement an EMIS solution, but rather ‘when and how’ energy management should be incorporated into best practices. There are a variety of regulatory and standards drivers impelling companies into EMIS implementation, and there are a variety of local, national, and private financial resources, rebates, grants, and other incentives for EMIS implementation. There is not, however, an abundance of resources that provide all of the information, which contributes to the overwhelming volume of business and industrial intelligence that is needed for companies to make fully informed EMIS implementation decisions.
CONTRIBUTIONS OF THE STUDY AND FOR WHOM
We have compiled a study of the EMIS industry that includes a comprehensive explanation of the conceptual elements of an energy management system and physical components of an EMIS system. In addition, we explore processes and business best practices for using energy information to increase efficiency and decrease overall energy costs. We present implementation considerations, from cost justification to audited success plans. All of this information is presented within the context of tangible revenue and market-share numbers of industry sectors, and known EMIS companies. This report explores the current and future market for EMIS system providers and EMIS service providers, both profit and nonprofit.
EMIS technology is a subject that we explore from an informational and intellectual property perspective, reviewing past energy management practices, current EMIS technology, and pending future EMIS solutions, along with an analysis of various distinctions within the available solutions. Company executives, managers, analysts, and energy professionals at companies of all sizes will benefit from reviewing the EMIS market and technology presented in a data-grounded context that provides the basis for better informed energy management decisions.
In a global economy, every industry is affected by local, national, and international standards, regulations, and guidelines. Energy usage and the related practice of energy management combine as one of the most critical concerns that affect companies all over the world, irrespective of their relative size, the nature of their product or service offerings, or any other details of their operation. No executive or other decision maker can afford to be ignorant of the many regulatory and standard-based issues that overlap to impact how they do business, from daily operation to potential present or future tax impact. In addition, this study will be of benefit to energy management professionals by presenting empirical data in a variety of contexts and formats to support market and technology energy management information, regulatory issues, market trends, and general EMIS industry intelligence.
SCOPE AND FORMAT
This study encompasses EMIS system and service providers; EMIS solutions broken down for consideration by business, industrial, governmental, and residential impact; regulatory and standards issues in regard to energy consumption, emissions reductions, and other energy management issues; and energy production and consumption numbers as the context in which EMIS systems are deployed. BCC Research analyzes each aspect of EMIS and presents historical and current market numbers, and forecasts future numbers for each EMIS component and category.
BCC Research analyzes the industry on a worldwide basis, including EMIS system components, EMIS service concepts and methodology, market segments for EMIS, including industrial, business (with a subcategory for datacenters), governmental, and residential. The historical, current, and future market position for these various EMIS categories are presented with contextual information to explain market drivers, trends, watch points, and potential market inhibitors.
METHODOLGY
BCC Research presents an analysis for the EMIS industry, including reported revenue numbers for EMIS system and service providers as made to the SEC (Securities and Exchange Commission) and/or other U.S. and international governmental agencies. We also analyzed a large volume of energy and energy management information available from U.S. governmental agencies and various other countries, through officially reported revenue and expenditure numbers. Such agencies included the U.S. Energy Information Administration (EIA), Census Bureau, the U.S. SEC, nonprofit agencies, and think tanks such as the World Resource Institute and the Alliance to Save Energy, and private companies such as Standard and Poor’s, Hoovers, and other companies that provide access to publicly reported energy statistics and related information. On the technology side of EMIS, BCC Research analyzed data gathered from the USPTO, the European Patent Office for world and U.S. patents, as well as other worldwide searchable databases available via the Internet.
INFORMATION SOURCES
BCC Research analyzed public documents, SEC filings, U.S. Census statistics, statistics from the U.S. EIA, and a large amount of information available from groups, consortiums, nonprofits, and think tanks operating internationally. This information was considered from an energy conservation perspective, as well as a profitability and best-business-practice perspective, and all were independently verified to ensure the most comprehensive, unbiased information-based approach to the EMIS topic. Additionally, BCC performed extensive patent searches and analyzed over 1,100 U.S. and world patents directly related to EMIS systems, services, business processes, and components.
AUTOHR CREDENTIALS
Jordan Sheridan is a technology analyst and writer with more than 20 years of experience who specializes in technology and intellectual property strategy and develops IP documentation and analysis studies, particularly for IT technology and algorithmically-based inventions for Fortune 100 companies.
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DISCLAIMER
The information developed in this report, is intended to be as reliable as possible at the time of publication and of a professional nature. This information does not constitute managerial, legal, or accounting advice; nor should it serve as a corporate policy guide, laboratory manual, or an endorsement of any product, as much of the information is of a speculative in nature. The author assumes no responsibility for any loss or damage that might result from reliance on the reported information or from its use.
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