North American Energy Saving and Performance Contracting Growth Opportunities

North American Energy Saving and Performance Contracting Growth Opportunities

Post-Pandemic Strategies Focus on Industry Convergence that Offers Building Owners Energy Efficiency and Cost Reduction

RELEASE DATE
16-Jun-2021
REGION
North America
Deliverable Type
Market Research
Research Code: K535-01-00-00-00
SKU: EN01247-NA-MT_25496
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Description

This research service analyzes the North American energy saving and performance contracting (ESPC) market. The ESPC market covers services such as energy audits; design and engineering; assistance in finance, equipment bidding, and acquisition; installation and commissioning; measurement and verification (M&V); and personnel training.

Frost & Sullivan segments the ESPC market into energy saving contracting (ESC) and energy performance contracting (EPC). These segments relate to the provision of energy and operational services to organizations to reduce energy consumption through greater efficiency of building system operations and/or load reduction. The critical difference between the segments is EPC ensures energy performance and reduces risk in energy management, while ESC does not include a performance-related component.

The North American ESPC market historically achieves over a 5% annual growth rate. However, it only recorded a 4.0% growth rate in 2020 due to the COVID-19 pandemic. The overall ESPC market is likely to expand moderately during the forecast period due to the renewed US administration under President Biden.

The three strategic imperatives that impact the North American ESPC market are disruptive technologies, industry convergence, and transformative mega trends. Digital sensor networks and advanced analytics-supported operational control and integration platforms enable better energy efficiencies. Frost & Sullivan expects operators to leverage these technologies to drive further benefits such as predictive maintenance and AI-based control in the next five to eight years.

The ESPC market’s nature encourages convergence as providers look to provide customers with comprehensive solutions. As a result, we will see further convergence of allied industries such as facilities management (FM) providers; energy service companies (ESCOs); lighting companies; and heating, ventilation, and air conditioning (HVAC) companies in the next five years.

The COVID-19 pandemic’s large-scale impact is evident across industries, especially in the short-term revenue growth drop due to project uncertainties. Although the pandemic has slowed ESPC revenue growth, capital budget pressures can push customers toward solutions such as EPC to transfer risks while maintaining operating expenditure (OpEx) levels in the next five years.

Key drivers in the North American ESPC market include insufficient capital funding, especially in the post-COVID-19 scenario; high operations and maintenance (O&M) costs for older buildings; and rising electricity prices. Growth restraints include the pandemic’s macroeconomic impact, poor project execution and contract complexities, and awarding contracts to ESCOs with the lowest upfront costs.

In the mid to long term, growth opportunities in the market include increasing customer base in the industrial and commercial vertical, integrating indoor air quality (IAQ) systems in centralized building automation systems, and partnering with FM companies.

Author: Melvin Leong

RESEARCH: INFOGRAPHIC

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Table of Contents

Why Is It Increasingly Difficult to Grow?

The Strategic Imperative 8™

The Impact of the Top Three Strategic Imperatives on the North American Energy Saving and Performance Contracting (ESPC) Market

Growth Opportunities Fuel the Growth Pipeline Engine™

Scope of Analysis

Scope of Analysis (continued)

Market Segmentation

Market Segmentation (continued)

What is Energy Conservation Measure (ECM)?

Contract Type Overview and Arrangements

Contract Type Overview and Arrangements (continued)

Contract Type Overview and Arrangements (continued)

Contract Type Overview and Arrangements (continued)

Growth Drivers

Growth Driver Analysis

Growth Driver Analysis (continued)

Growth Driver Analysis (continued)

Growth Restraints

Growth Restraint Analysis

Growth Restraint Analysis (continued)

Revenue Forecast

Revenue Forecast Analysis

Revenue Forecast by Contract Type

Revenue Forecast by Region—EPC Market

Revenue Forecast by Region—ESC Market

Revenue Forecast Analysis by Contract Type and Region

Revenue Forecast by ECM—EPC Market

Revenue Forecast by ECM—ESC Market

Revenue Forecast Analysis by ECM

Revenue Forecast by Industry Vertical—EPC Market

Revenue Forecast by Industry Vertical—ESC Market

Revenue Forecast Analysis by Industry Vertical

Competitive Environment

Revenue Share of Top Participants

Revenue Share Analysis

Growth Opportunity 1: Increased EPC Penetration in the Industrial and Commercial Vertical to Leverage Economies of Scale

Growth Opportunity 1: Increased EPC Penetration in the Industrial and Commercial Vertical to Leverage Economies of Scale (continued)

Growth Opportunity 2: Integration of IAQ Systems to Address Health Requirements with Energy Savings

Growth Opportunity 2: Integration of IAQ Systems to Address Health Requirements with Energy Savings (continued)

Growth Opportunity 3: Partnerships with FM Companies to Optimize Operations

Growth Opportunity 3: Partnerships with FM Companies to Optimize Operations (continued)

List of Companies in ‘Others’

Your Next Steps

Why Frost, Why Now?

List of Exhibits

Legal Disclaimer

This research service analyzes the North American energy saving and performance contracting (ESPC) market. The ESPC market covers services such as energy audits; design and engineering; assistance in finance, equipment bidding, and acquisition; installation and commissioning; measurement and verification (M&V); and personnel training. Frost & Sullivan segments the ESPC market into energy saving contracting (ESC) and energy performance contracting (EPC). These segments relate to the provision of energy and operational services to organizations to reduce energy consumption through greater efficiency of building system operations and/or load reduction. The critical difference between the segments is EPC ensures energy performance and reduces risk in energy management, while ESC does not include a performance-related component. The North American ESPC market historically achieves over a 5% annual growth rate. However, it only recorded a 4.0% growth rate in 2020 due to the COVID-19 pandemic. The overall ESPC market is likely to expand moderately during the forecast period due to the renewed US administration under President Biden. The three strategic imperatives that impact the North American ESPC market are disruptive technologies, industry convergence, and transformative mega trends. Digital sensor networks and advanced analytics-supported operational control and integration platforms enable better energy efficiencies. Frost & Sullivan expects operators to leverage these technologies to drive further benefits such as predictive maintenance and AI-based control in the next five to eight years. The ESPC markets nature encourages convergence as providers look to provide customers with comprehensive solutions. As a result, we will see further convergence of allied industries such as facilities management (FM) providers; energy service companies (ESCOs); lighting companies; and heating, ventilation, and air conditioning (HVAC) companies in the next five years. The COVID-19 pandemics large-scale impact is evident across industries, especially in the short-term revenue growth drop due to project uncertainties. Although the pandemic has slowed ESPC revenue growth, capital budget pressures can push customers toward solutions such as EPC to transfer risks while maintaining operating expenditure (OpEx) levels in the next five years. Key drivers in the North American ESPC market include insufficient capital funding, especially in the post-COVID-19 scenario; high operations and maintenance (O&M) costs for older buildings; and rising electricity prices. Growth restraints include the pandemics macroeconomic impact, poor project execution and contract complexities, and awarding contracts to ESCOs with the lowest upfront costs. In the mid to long term, growth opportunities in the market include increasing customer base in the industrial and commercial vertical, integrating indoor air quality (IAQ) systems in centralized building automation systems, and partnering with FM companies. Author: Melvin Leong
More Information
Deliverable Type Market Research
No Index No
Podcast No
Predecessor K224-01-00-00-00
Author Pratik Paul
Industries Environment
WIP Number K535-01-00-00-00
Is Prebook No
GPS Codes 9343-A4