If there were any doubt that advanced energy has become big business — particularly building efficiency — a report out today puts it to rest.
With $199.5 billion in annual revenue, the advanced energy industry is now bigger than the airline industry, equal to pharmaceuticals, and nearly equal to consumer electronics in the United States, says the report commissioned by Advanced Energy Economy (AEE).
In fact, advanced energy — clean and sophisticated approaches in power, fuels and transportation — grew 14 percent last year. That’s five times the rate of the U.S. economy.
And saving energy, particularly in buildings, topped all advanced energy segments with $60.1 billion in revenue. This represents 43 percent growth over four years in the U.S.
“The report reinforces what we’ve known for a long time,” said Kevin Self, vice president strategy and corporate development, Johnson Controls. “Building efficiency is a critical and important growth sector because the outcomes, including reduced operating costs, reduced energy costs, greater reliability and resilience, are in high demand.”
Prepared by Navigant Research, the report pegs global revenue for advanced energy at nearly $1.3 trillion, up 12 percent over last year.
“We are seeing a transformation in the way we make, manage, and use energy in this country and around the world. This transformation is driven by dynamic changes in technology, policy, and markets,” said Graham Richard, AEE’s CEO, in the report’s foreword.
AEE looked at seven categories of energy: transportation, fuel production, fuel delivery, building energy efficiency, industry (including combined heat and power), electricity generation and electricity delivery and management.
Lighting worldwide winner
Worldwide, building efficiency ranked as the third largest segment of advanced energy. At $209.5 billion, it was up 40 percent since 2011 and 12 percent year-over-year. Building efficiency was bested by electricity generation and transportation in the global analysis.
Lighting represented the largest category — $103.6 billion — in building efficiency globally. Commercial energy efficient lighting earned $54 billion and residential $44 billion.
Improvements to building envelope represented the fastest growing market year-over-year in the global category. Up 18 percent, it netted $18.7 billion in 2014. Chief drivers were commercial and residential energy efficient retrofits, and zero net energy buildings, according to the report.
In the U.S., building envelope improvements represented the fastest growth segment of building efficiency, up 28 percent, with $9.3 billion from homes and $266 million from net zero buildings. Smart appliances more than doubled in 2014, to $465 million.
Disruptive energy trends
The rise of distributed generation marks one of the most important and disruptive energy trends, according to the report. It pegs the distributed energy market at $6.3 billion in the U.S. and $35 billion globally. Navigant included solar PV, small and medium wind, fuel cells, and natural gas generator sets in its DG calcualtions.
The U.S. dominated the microgrid market with $2 billion in revenue, representing 44 percent of the global revenue in 2014, and 21 percent year-over-year growth in the U.S.
The demand response industry also continued to be centered in the U.S., with a $1.25 billion in revenue in 2014 out of $2 billion worldwide.
Other notable findings for the energy efficiency, smart and disruptive energy sectors, include:
- The building energy management systems (BEMs) market grew 44 percent in the U.S. from 2011 to 2014, and has now reached $1.1 billion. The US represents 38 percent of the global BEMS market.
- The energy service company (ESCO) industry grew 10 percent to $611.2 million in the U.S. from 2013 to 2014. This doesn’t include ESCO-installed HVAC equipment ($4 billion nationally).
- Industrial combined heat and power (CHP) saw five percent revenue growth in the U.S. year-over-year, and 216 percent over four years, reaching $3.2 billion in 2014. The U.S. is now 11 percent of the $28.5 billion global CHP market.
- Industrial energy management system (IEMS) represent a $4 billion US market, up from $3.2 billion in 2011. Schneider Electric, Siemens, Invensys, and Rockwell Automation are leading suppliers. But large IT companies are making their way into the field, among them SAP and IBM
- The home energy management systems (HEMS) market is seeing dramatic growth from $44 million in 2011 to $150 million in 2012, to an estimated $366 million in 2014.
Revenue is down 19 percent for hybrid vehicles in the U.S., but up 34 percent for plug-in electric vehicles year-over-year. EV charging station revenue grew 31 percent in the U.S., to $201.5 million, a seven-fold increase since 2011.