Advanced Sensor, Control Technology Brings Big Growth to Building Energy Management Market

June 7, 2012
New technologies and lowered costs promise to boost energy management systems and save companies cash.

The building energy management system (BEM) market is positioned for explosive growth in the next decade thanks to developments in advanced sensors and controls.

So says a new study released by Lux Research, which predicts the market will grow at a 17% compound annual rate to become a $2.14 billion industry by 2020.

"Advanced sensors and controls, although they are very small markets at present, they are going to experience tremendous growth through 2020," said Ryan Castilloux, Lux Research analyst. "With this growth, these advanced technologies are going to enable buildings below 50,000 square feet -- which is 95% of commercial buildings in the United States -- the greatly improve their energy systems."

The effect of this will be drastically improved energy efficiency capabilities to help save companies big money and have a positive effect on the environment.

Optimizing a building's electricity and HVAC usage is a particularly low-hanging fruit for companies pushing for improved energy efficiency, said Castilloux.

"Commercial buildings just consume a tremendous amount of energy," he said. "A significant amount of energy is just going right out the windows or out the envelope of the building. They're energy sieves."

The advanced sensors and controls close up some of these areas of waste by using sensors throughout buildings to turn lights on and off as needed based on occupancy. On the HVAC side, advanced sensors can essentially measure CO2 levels in a room to determine if a room is occupied and ventilate accordingly.

New Use of Old Tech

These are not new technologies.

As Castilloux noted, Microsoft's (IW 500/16) Bill Gates has famously used them for the past 10 years or so and they can be found in many commercial buildings over 50,000 square feet with greater funds for investment.

The sudden growth now, he said, is due to new developments that are bringing the total cost of investment under a critical price threshold for smaller structures.

"From our ongoing research, we've concluded that in the commercial space, really anything beyond a three-year payback period is something that will really be frowned upon in the market," Castilloux said. "So breaking that three-year payback period is the key threshold to get these technologies to take off."

Policy changes rewarding energy efficiency efforts with incentives and rebates may help offset total costs and bring down the payback timeline. Also, new advances to the technology that help make installation less invasive and time consuming will cut significant costs and keep the system within that three-year threshold.

The boon to the sensors and controls market, said Castilloux, is an essential part of the future of energy management systems.

"This isn't just a trend," he said. "It's something that's inevitable and has to happen. "With the way the world is advancing at the moment, it's certainly something that is going to become much more widespread in the next decade.

As part of the study, Lux Research developed a demand-side forecast to quantify opportunities for BEMS applications and building automation system (BAS) applications. Among its findings:

  • Market is shifting toward BEMS. The building energy management market is rapidly transitioning from a BAS-dominant one to a BEMS-reliant one. In 2020, about 77% of the $2.14 billion U.S. market will comprise BEMS applications, and 40% will come from buildings below 50,000 square feet.
  • Policy is a promising enabler. In the U.S., 20 states have energy efficiency resource standards that will boost uptake of efficient building systems. The European Union has been similarly aggressive with goals such as 20% lower energy consumption levels by 2020. Together, these policies will foster growth of the market for sensors and controls.
  • Opportunities at the bottom of the pyramid. Developers such as Lutron, Leviton, Johnson Controls, and Honeywell will embrace advanced sensors and controls and shift strategies in order to hone in on buildings below 50,000 square feet -- in 2020, the number of such buildings with BEMs will be almost 40 times what it is today.

The report, "Sensors and Controls for BEMS: Providing the Neural Network to Net-Zero Energy," is part of Lux Researchs Efficient Building Systems Intelligence service.

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