December 2013
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Who Will Win the Energy Management Software Business for Smart Buildings?

 BEMS and Enterprise Energy Management software will only deliver if they work together.

Allan McHale

Allan McHale,
Director,
Memoori


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At Memoori Research, we have just published our second report analyzing the fast growing market for Energy Management Software in Smart Buildings and together with its “sister” report which focused on interfacing Smart Buildings with Smart Grid they confirm beyond any shadow of doubt that together they will play the critical role in reducing CO2 emissions from buildings in the 21st century low carbon economy, whilst dramatically reducing operating cost.

Whilst presently BEMS and Enterprise Energy Management software operate as separate businesses they will only deliver against customer value propositions if they work together.

Today there are four different businesses that can and will play important roles in managing energy and the environment in Smart Buildings. Of these BEMS sits at the center and provides the control of the buildings environment and delivers most of the data and information upon which the EEM system provides an end-to-end solution for enterprise energy management in the building.

The ESCO’s and System Integrators are crucial to delivering the solution. ESCO’s because they can be both buyers and/or influence the buying decision and provide the finance and energy supply. System Integrators because they now have the skills to integrate the BEMS and other technical services in buildings such as lighting and electrical management systems and finally connect up to the EEM system.

The Roles & Relationships between BEMS, EEM & ESCO Suppliers

We have identified some 90 companies that offer software and systems to control and manage energy consuming and energy generation equipment in Smart Buildings and interface with load control and automatic demand response between Smart Buildings and Smart Grid. In addition the list includes BEMS suppliers that also deliver supervisory software packages to manage their systems and these can include monitoring and analyzing energy consumption. Whilst the list is not comprehensive it does include most of the major suppliers to the world market.

The list breaks down five categories of software and systems products and service suppliers. These include, BEMS suppliers, Business Enterprise Cloud based Energy Management Software suppliers, Web Based Energy Management Software (EMS) suppliers, Load Control & Demand Response software and ESCO Service suppliers, particularly those that also dominate the BEMS business.

BEMS Suppliers

Building Energy Management Systems (BEMS) suppliers manufacture DDC building control systems, other titles given to this category include BMS (Building Management Systems) and Automated Building Controls. The list includes some 28 companies but excludes approximately another 10 companies that are wholly owned subsidiaries of Honeywell, Johnson Controls, Schneider, Siemens and UTC that operate semi-independently. These five companies take approximately 70% of the world’s BEMS product market. They have dominated this business for the last two decades and have large well-established heritage estates.

Further analysis shows the first four of these can offer solutions in all five categories either through wholly owned subsidiaries or active partnerships. This puts them in a very strong position to take a very significant share of all the software packages necessary to interface BEMS with Smart Grid.

In addition the report analyses the acquisition that BEMS companies have made in the EEM business which further illustrates that they are expecting this market to become an important part of their business. In particular Schneider Electric and Siemens have the technological skills crossing the electro / mechanical and IT worlds that are required for the Smart Building to Smart Grid interface business as it develops over the next 20 years. They have majored in building technology and electrical transmission and distribution systems for many decades and have a strong global presence. In addition they have well-established ESCO services. Honeywell and Johnson Controls have equal capacity and capability to these companies in all these technologies other than electrical network management control. The expertise, in so far as it applies to Smart Building to Smart Grid interfaces, has recently been acquired by them.

Much of the functionality of an EEM system can be delivered through adding further functionality to the BEMS. For small and medium sized buildings and real estates this is the most likely method they will adopt. For large prestigious building and real estates having many hundreds of buildings spread around the globe they need a comprehensive EEM. The buyers will be major corporations, most multinational, and Government and Public Sector building owners and most would expect EEM to be delivered through IT orientated companies.

EEM Suppliers

We have identified some 39 suppliers of Enterprise Energy Management Systems that can provide three different types of software packages either separately or as a comprehensive package. The EEM Platform or portal can be Cloud Based and / or a Web based and the Load Control & Demand Response function can operate the building services only and or interface with the Grid, but will interface Smart Grid when its ADR capability is fully installed. The requirements of these packages will depend upon what is already installed in the Smart Building; does it have an advanced BEMS or a simple one, and does it include lighting control and other energy consuming plant not controlled by the BEMS.

Of the 90 companies three software categories can be supplied by some 61 companies including 39 specialist software companies (EEM), mostly new starts. Notable companies here include, ActiveLogix, C3, CA, CarbonSystems, Elster Energy ICT, IBM Technologies, Pacific Controls, Schneider Electric, and Tridium. Most of the companies in this group have little experience of the Smart Building or Smart Grid businesses. This does not prevent them from producing good solutions but they will have to prove to building and estate owners and skeptical utility businesses that they have the technical and financial expertise to deliver robust solutions. Most of those that have got their products to market have done so through partnering with BEMS Integrators or ESCO’s.

ESCO Suppliers

The last group, ESCO’s, will have a major influence in making Smart Buildings interface with Smart Grid. 10 companies are listed here of which six are major BEMS companies and are also the major ESCO’s in world markets. In addition three are also major suppliers of electrical transmission and distribution networks and three have recently acquired third party energy supply companies. If this was not enough they can bring together the benefits of Virtual Power Plants (VPP) through the building estates that they manage. However it should be noted that there are many thousands of small and medium sized ESCO’s in the developed markets of the world.

Building Owners Will Determine the Future of the EEM Market

The initiative to drive EEM in Smart Building and interface with the Smart Grid will need to come from the Smart Building owners, for in the world’s developed markets the utility companies are pre-occupied by their smart meter, AMI and long-term ADR programs.

Smart Building owners will require that EEM software will integrate with BEMS and meters, interface with IT, Data Centers, Telecoms, Lighting Controls, Primary energy and on-site generation. It will need to feed in weather data, utility tariff rates, energy benchmark and data on financial incentives and benchmark against new regulations and mandates.

Control Solutions, Inc In addition customers will require supplier management account tracking and energy procurement programs. This is only a part of the list of the functionalities that will be required.

The software architecture must be scalable if it is to be purchased by the retail, banking, educational and health sectors for they have many hundreds of buildings spread across countries, regions and continents. It’s not uncommon for real estate’s to have a 1000 or more large buildings spread across countries and different continents and these will require different user interface languages. Having past these tests clients need to be satisfied that the supplier has the organizational and financial resources in place and equally as important does he have alliance and partnerships with capable System Integrators.

The Supply Side Gears up to meet Demand

The supply side is gearing itself up to meet the challenges and the world’s major electrical equipment manufacturers such as Siemens, Schneider Electric, ABB and GE; and a host of relatively new specialist companies are equipped to deliver solutions to meet the burgeoning need operate Smart Building.

The BEMS and ESCO’s are in a strong position to take a big share of the EEM market because they are in a trusted position already supplying complimentary products and services and having a massive heritage estate to exploit. In addition we have shown they have already acquired EEM suppliers and therefore now have the skills to put total solutions together. However for new construction projects we think that EEM specialist companies are likely to be favored by the CIO’s of Smart Building Estates and the major Electrical Utilities for Smart Grid ADR projects.

Schneider has the technology in-house to meet these requirements for most projects but they have recently signed a strategic technology agreement with one of the world’s major software companies, OSIsoft. OSIsoft will provide their PI System, a leading infrastructure technology for the management of real-time data and events whilst Schneider Electric, a global specialist in energy management will provide innovative and comprehensive energy management solutions. The joint solution combines Schneider Electric’s energy management and BEMS expertise with the streaming data and event management capabilities of OSIsoft’s PI System.

The four major BEMS and ESCO companies, Honeywell, Johnson Controls, Schneider and Siemens hold a unique and powerful position to win EEM business but will not be able to satisfy the needs of the major real estate owners unless they take the action that Schneider Electric has done and form alliances with those that can deliver the platform infrastructure technology.

The major software companies are also in a strong position but at this time lack the interface skills and more important contact with many of the Smart Building owners. They could save themselves a lot of hassle if they formed working relationships with the BEMS/ESCO companies or their System Integrators. The market is in its infancy; now is the time to get these strategic alliances in place.

For more information, on Memoori’s report “The Market for BEMS and Enterprise Energy Management 2013 to 2017 – Please visit the Website - http://www.memoori.com/portfolio/bems-market-2013-to-2017/

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