July 4, 2003—In the wake of Enron and other energy service company (ESCOs) scandals, current participants in the non-residential energy management services market are hoping to reverse their predecessors’ mistakes by wooing customers with improved services, better products, and innovative energy management strategies, says new research from Frost & Sullivan.
Although the increasing trend of utility-affiliated ESCOs focusing on their core commodity and abandoning services has severely constrained industry growth, an anticipated power shortage midway through the decade is expected to cause a resurgence in the energy management services market and accelerate growth.
New analysis from Frost & Sullivans North American Non-residential Energy Management Services Market, reveals that this market totaled $24.93 million in 2002 and is poised to expand to $37.72 million by 2009.
“Making inroads into the reluctant commercial and industrial (C&I) sectors seems key to future profits as nonprofit organizations, schools, and government end user markets are increasingly getting saturated,” says Frost & Sullivan Senior Analyst Roberta Gamble.
The ESCO market, particularly utility-affiliates, is focusing on cultivating large and energy-intensive industrial end-users that previously used in-house Energy Management Services (EMS) departments.
“Advanced products, services and software capabilities, are enabling post Enron participants to improve energy efficiency measures that include cogeneration/combined heat and power, on-site power generation for peaking, and net metering; and in some states and cities, more renewable power at public buildings,” adds Gamble.
New mandates from the Department of Energy are also boosting growth, as they compel public institutions and nonprofit organizations to manage energy resources more efficiently through improved energy portfolios.
Previously, poor customer relations drove fickle end-users to use price under-cutting within the market to their advantage, leaving few surviving price-depreciating ESCOs. Existing profitable ESCOs are left to woo end-users that expect higher savings at lower costs and gain business at more realistic prices.
“Market participants compete not only against other players in their respective market segments, but against the other segments as well. Business is shifting away from traditional, utility-affiliated ESCOs towards the rising value-added propositions offered by equipment and controls manufacturers,” says Gamble.
For more information, contact Frost & Sullivan.
