IDC Energy Insights announced today the availability of two new research documents focused on commercial Smart Building systems, a market that is emerging as a “killer app” for the smart grid. The first report, Smart Buildings Global Market Forecast 2010-2015 (Document # EI227827), forecasts a global compound annual growth rate (CAGR) in spending of 26.6% from 2010-2015, with forecasted sales reaching $10.2 billion in 2015.
Most of the market’s forecasted spending growth will occur in Western Europe (28.8% CAGR) and North America (28.4% CAGR), with demand projected to continue for at least the next five years. The forecast includes systems and services for the control and optimization of building operations and maintenance.
Worldwide, Smart Building (SB) systems market growth will be driven by building owners and managers seeking ways to reduce operating costs and increase the uniqueness of their building assets, thereby embracing the complementary objectives of energy efficiency and sustainability. SB systems are a set of intelligent technologies that enable building managers to measure, monitor, control and optimize the operations and maintenance of a building.
“The primary motivating factor behind the emergence of Smart Building systems is cost reduction through energy savings,” explained Casey Talon, a research analyst with IDC Energy Insights’ research advisory services focused on clean energy, and one of the authors of the report. “Energy consumption in the building sector is usually one of the leading line items in operational budgets and thus a tempting target for Smart Building controls. Heating, ventilation and air conditioning (HVAC) plus lighting comprise more than 70 percent of a building’s energy consumption.”
Ms. Talon continued, “A second leading motivating factor behind sales of SB systems is the attempt to reach corporate sustainability goals, including greenhouse gas emission reduction programs and carbon reduction goals. In our survey of building management decision-makers, 84 percent of respondents incorporate energy efficiency or conservation measures as a component of their operations.”
The second report, Business Strategy: Smart Building Systems Challenges and Opportunities (Document # EI227915), outlines the opportunities and challenges for the three primary stakeholders in the commercial building arena: electric utilities, building owners, and technology vendors. The report gives emphasis to IDC Energy Insights’ belief that SB systems have tremendous disruptive potential for the energy and information and communications technology (ICT) industries.
“The smart grid, which has received significant attention, is – in the end – a platform. The Smart Building might turn out to be the first true ‘killer app’ of the new smart grid infrastructure,” stated Ms. Talon. “Advances in energy efficiency and electricity demand management through SB systems will transform the interaction between commercial buildings and the electricity grid.”
Examples of the opportunities and challenges highlighted in the report include:
• The highest growth rate areas will be where electricity markets have decoupled revenue from the quantity of energy sold, thereby monetizing energy efficiency projects – notably, California, New York and Ontario. Utilities in these regions are advised to explore capital-friendly methods of incentivizing SB systems, such as rebates.
• Electric utilities that operate in non-decoupled regions should establish pilot projects with large building owners to become familiar with SB systems, which will become more widespread when local regulators create methods for incentivizing energy efficiency investments.
• While building owners and managers often seek an immediate return on investment to their major capital expenditures, the recent global recession saw vacancy rates increase, forcing owners to more aggressively compete for tenants. An energy-efficient building that can promise lower energy bills is one method of drawing interest in a property.
• For SB systems vendors, success in this growing market will be influenced by acquiring a reputation through verified performance data and building solid partnerships, as well as forming relationships with established equipment distributors.