This article was written by Daphne Tomlinson of Tomlinson Business Research.
As the global energy sector experiences major disruption and fundamental transformation, utility companies are adjusting their business models towards new technologies and services aimed at differentiating themselves in tomorrow’s energy market.
The opportunity for utilities to leverage Smart Building technologies to offer innovative services has been recognized by many firms, who have acquired companies or invested in strategic alliances and technology projects.
One area of focus has been to gain a foothold in the market for energy efficiency and optimization solutions and services for commercial and industrial customers. 3 categories of investment can be identified; target companies offering
- 1. Building energy management systems
- 2. Energy data analytics software and customer engagement platforms
- 3. Or building management systems integration and energy services.
Building Energy Management Systems
Strategic partnerships and technology acquisitions in 2015 have included:
- ERM Power, the second largest supplier of power to business and government customers in Australia, acquired Perth-based Greensense, a small provider of sustainability and energy management software for leading companies, including Aldi supermarkets and Savills real estate (Dec 2015).
- Direct Energy (USA), through its parent company Centrica plc, acquired Panoramic Power (Israel), a leading provider of device-level energy management solutions, who has deployed more than 25,000 sensors at 700 sites across 30 countries. The purchase price was $60 million (Nov 2015).
- Twenty-First Century Utilities, an independent company formed to invest in and own regulated utilities and infrastructure to create an entirely new model for delivering energy, acquired Gridpoint, a US building energy management player with about 11,000 sites under its management (Nov 2015)
- Duke Energy, the largest electric power holding company in the USA, acquired a majority share in Phoenix Energy Technologies (USA), a provider of energy management systems and services for commercial customers (Oct 2015).
- Xcel Energy, a major U.S. electricity and natural gas company, with operations in 8 Western and Midwestern states, and BuildingIQ, a leading energy management software company, launched a building optimization pilot program for commercial buildings in the utility’s Colorado territory (Sep 2015).
- NRG Renew LLC, a wholly owned subsidiary of NRG Energy, Inc., the largest independent power producer in the U.S, and Lucid, a leader in cloud-based building management, announced a channel partnership which involves the adoption of Lucid’s BuildingOS platform in 2,500 office buildings (Jul 2015).
- RWE nPower acquired Welsh energy management software company RUMM (Remote Utility Monitoring & Management); npower Business Solutions, the second largest supplier of energy to British businesses, will roll out RUMM’s software to its biggest customers, with the goal of delivering energy efficiency at scale (Apr 2015).
Energy Data Analytics Software and Customer Engagement Platforms
Strategic partnerships and acquisitions in 2015 have included:
- Engie Group, through its U.S. subsidiary Ecova acquired Retroficiency to expand its data analytics offering. For Ecova’s broad base of commercial and industrial clients, this acquisition enables remote analytics for buildings in Ecova’s energy and sustainability management portfolio of over 700,000 sites (Oct 2015).
- Sacramento Municipal Utility District (SMUD) selected Opower’s customer engagement platform for a multi-year partnership to deliver personalized communications across residential, commercial, and industrial customers (Feb 2015).
- Engie invested $7.2 million in Tendril, a leading U.S. data analytics software provider and announced a partnership to enable European electricity customers to have access to Tendril’s customized Energy Services Management solution (Feb 2015).
- FirstFuel Software (USA) and E.ON UK partnered to provide the utility’s Energy Toolkit for Small and Medium-sized Enterprise (SME) customers, launched in Dec 2014. E.ON recognized the opportunity to better engage SME customers and FirstFuel brought their customer energy intelligence technology into the Energy Toolkit.
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Building Management Systems Integration and Energy Services
Recent strategic partnerships and acquisitions by European utilities have included:
- E.ON Connecting Energies (Germany) acquired Heat & Power, a leading Italian energy services company offering on-site generation solutions to industrial and commercial customers in Northern Italy (Dec 2015).
- French based Engie added to the growing portfolio of its subsidiary Cofely with the purchase of energy services company, DESA Australia with 340 employees. The DESA acquisition is in line with ENGIE’s strategy to help customers achieve their energy efficiency, environment, operations and maintenance objectives by offering customers a “one-stop shop” for multi-technical services, asset-based energy performance and environmental solutions. (Dec 2015).
- SSE plc (Scottish & Southern Energy, UK) acquired Energy Solutions Group, the largest UK privately owned player in the building management systems and energy services market, with revenues in excess of £50 million (Jul 2014).
- Engie, via Cofely acquired Ecova in May 2014. Ecova manages $20 billion of utility expenses (energy representing the majority) and generated $180 million of revenues in 2013. This acquisition expanded Cofely’s geographic base in North America for energy efficiency and multi-technical services while accessing significant installed-base data, and increasing its energy data management know-how.
- E.ON Connecting Energies acquired Matrix, the UK's market leader in management and energy efficiency services for commercial buildings with 340 employees and £56 million revenues (Sep 2013).
One can expect to see further partnerships and alliances in 2016 as utilities seek to transform their businesses and owners and operators of commercial and industrial buildings look for ways to optimize their energy expenses.