Energy Management Software Market in Canada and the US
In the call for a rapid move away from fossil fuels; decarbonizing industry, as well as the communities, cities, and buildings in which we live and work – it is now more critical than ever for governments, the public and private sectors to increase lines of communication, share knowledge, expertise, and resources to accelerate efforts towards carbon-neutrality, sustainability, and energy efficiency at the start of the decade critical to the survival of our planet’s ecosystems.
Bridging the gap between governments’ climate policies and legislation and the industrial and commercial sectors’ energy management, sustainability and cost reduction objectives are the services and expertise provided by ESCOs, which help businesses, industrial companies, schools, offices, universities, hotels, government departments/agencies, municipalities, and the like implement energy-saving measures, reduce costs, cut carbon emissions, decrease technical and performance risks related to efficiency projects, and provide financing options to suit.
Surveying market conditions
As energy management as a service (EMS) companies strive to help businesses use less energy it is critical for ESCOs to be aware of changing market conditions as they relate to electricity pricing, electrical value chain (from production to distribution/retail), energy technologies, legislation, and how businesses use energy. Each of these variables have an impact on the other.
For example, Andrea Reimer, a former City of Vancouver Councillor at the Urban Futures Conference, told a story of the city attempting to implement energy performance contracting (EPC) in the same manner as some US cities. It failed.
Pictured: Andrea Reimer
The reasons highlight the importance of knowing the electricity market in a place, the technologies used and legislation. Energy prices in British Columbia are lower, and the building code already placed an emphasis on energy efficiency.
Looking at the United States and Canada, the need for place-specific knowledge becomes evident. In both countries, some states and provinces are taking the lead in transitioning to clean energy by introducing policies that promote energy efficiency and energy management. British Columbia’s CleanBC Plan has set provincial targets for reducing emissions by 40% from 2005 levels by 2030, then 60% by 2040 and 80% by 2050.
Energy management market in Canada
In Canada, provinces and territories are responsible for the distribution and transmission of electricity. Across provinces and territories, the demand for and supply of energy is variable. This presents challenges and opportunities for reducing energy use and introducing energy efficiency. The Canadian Energy Management Market’s revenues reached US$179 million in 2018 and are expected to grow to US$307 million by 2023.
The Liberal Party’s re-election is promising. The Party’s climate action plan aims to align the whole country and make Canada a leader. The Federal Government has made it mandatory for all provinces and territories to introduce a carbon price of $20/tonne in 2019 under the Greenhouse Gas Pollution Price Act (GGPPA) if they have not implemented place-specific solutions to address GHG emissions. The carbon price will rise to $50/tonne by 2022; an incentive to transition.
The GGPPA uses two mechanisms to incentivise the reduction of GHG pollution – a trading system, and a regulatory charge on fuel based on carbon content.
Recognising that a carbon price is one policy, the Federal Government is supporting innovation in the clean technology sector by funding research and development of new and proven technologies and infrastructure and facilitating partnerships between academia, industry, and government.
The Office of Energy Efficiency in Natural Resources Canada (NRCan) supports business and industry in becoming more energy-efficient through the adoption of ISO 50001 Energy Management Systems (which has resulted in cost savings of $10 million annually for large facilities) and the Canadian Industry Partnership for Energy Conservation (CIPEC), a voluntary network of over 2,400 facilities and 50 trade associations.
There is a demand for energy management services, particularly in industry, which accounts for 39% of total energy use, and 36% of emissions.
For industry, NRCan has introduced the ENERGY STAR® Challenge for Industry, ENERGY STAR for industry certification, and five ENERGY STAR Energy Performance Indicators for the integrated steel, automotive, and commercial banking sectors. Financing and technical assistance are also provided to companies through the Industrial Energy Management Programme.
Being an energy-intensive economy there is a demand for energy management services, particularly in industry, which accounts for 39% of total energy use, and 36% of emissions. Data shows that energy demand is currently 10% below the peak year of 2004, however; opportunities for energy management services remain (Table 1), in particular in the manufacturing sector.
Table 1: Energy use in Manufacturing: 7 Subsectors |
| Subsector | Share of sector energy use % | Change in energy consumption % | Change on GDP % | Change in energy intensity % |
|---|---|---|---|---|
| Paper | 25.1 | - 41.6 | - 21.5 | - 25.7 |
| Primary Metal | 22.5 | - 6.4 | 29.3 | - 27.6 |
| Chemical | 14.0 | 5.4 | 31.5 | - 19.8 |
| Petroleum and Coal Product | 14.0 | 0.1 | 13.0 | - 11.4 |
| Wood Product | 6.0 | 16.4 | 59.5 | - 27.0 |
| Food | 5.4 | 32.8 | 47.4 | - 9.9 |
| Non-Metallic Mineral Product | 4.7 | - 15.7 | 54.9 | - 45.5 |
Sector: Manufacturing (change from 1995 – 2016)
(Source: NRCan)
In the last few years, new policies to improve the energy efficiency of buildings have been introduced. In 2017, Build Smart, Canada’s Building Strategy was introduced, the primary objective is to transform Canada’s built environment through five pathways (Box 1)
| Box 1: Build Smart – Five Pathways |
|---|
| 1. Getting Net-Zero Energy Ready: Raising the efficiency bar for new builds |
| 2. Bringing Buildings Into the Future: Modern energy codes for existing homes and buildings |
| 3. Setting Energy Data Free: Measuring and sharing energy use data to help Canadians and businesses make smart energy use decisions |
| 4. Being Equipped for the Future: Holding our appliances and equipment to a higher standard |
| 5. Financial Incentives: Making efficiency affordable, accessible and fair by supporting provinces and territories to scale up their efficiency programmes |
In 2019 the Federal Government placed a major focus on building energy management and efficiency, evidenced in a $1 billion budget to increase energy efficiency in residential, commercial and multi-unit buildings. The funds are primarily channeled into 3 key initiatives:
- Community Climate Action programme, supporting efficiency retrofits for large community buildings and demonstration projects in Canadian municipalities.
- Second, the Community EcoEfficiency Acceleration programme, which supports the upfront costs installing renewable energy technologies
- And finally, the Sustainable Affordable Housing Innovation programme, which supports energy efficiency improvements and on-site energy generation in affordable housing developments.
What is clear, is the opportunity for energy service companies in assisting businesses, property/building owners to design, implement and evaluate projects/solutions that will have a lasting impact on their energy-saving ability.
Energy management market in the US
The energy and electricity market in the US is complex. The retail and wholesale energy markets are a combination of traditionally regulated and competitive markets.
The presence of regulated or competitive markets is not determined by state boundaries. In some states, municipal governments run the utilities; while in other private companies operate the utility across several states. The complexity has not hindered the American Energy Management Market as revenues have reached US$1,956 million and are expected to grow to US$3,512 million by 2023.
In the United States, within the Department of Energy, the Office of Energy Efficiency and Renewable Energy (EERE) is tasked with overseeing the transition and ensuring that Americans have access to clean and affordable energy via EERE’s Strategic Plan 2016-2020 which sets out the strategic goals for the US’ clean energy economy (Box 2).
Table 2: ESPC by State
| Box 2: EERE's Goals |
|---|
| Goal 1: Accelerate the development and adoption of sustainable transportation technologies |
| Goal 2: Increase the generation of electric power from renewable sources |
| Goal 3: Improve the energy efficiency of our homes, buildings and industries |
| Goal 4: Stimulate the growth of a thriving domestic clean energy manufacturing industry |
| Goal 5: Enable the integration of clean energy into a reliable, resilient and efficient electricity grid |
| Goal 6: Lead efforts to improve federal sustainability and implementation of clean energy solutions |
| Goal 7: Enable a high-performing, results-driven culture through effective management approaches and processes |
A key focus of EERE is Energy Saving Performance Contracting (ESPC), a budget-neutral approach to reduce energy and water use.
[Related: Measure and verify and forecast savings for ESPC with machine-learning analytics software]
With the DOE, EERE has developed an ESPC Toolkit to support business, state, and local governments to implement energy efficiency measures in their building stock. The EERE has also consolidated information that will enable energy management service companies to work with businesses and government agencies; namely, a database of states with ESPC policies and relevant legislation (Table 2). At present, the states included in the database are Alaska, Alabama, Colorado, Connecticut, Hawaii, Kansas, Louisiana, Massachusetts, Minnesota, Nevada, New Mexico, Virginia and Washington State.
[Click here to download workbook of more detailed information for each state)
ESPC Reference Library Matrix – Reference Table (Source: EERE)
Interestingly, California, a state at the forefront of climate action is not included in this database. It is worth briefly discussing California’s energy challenges. The 2019 wildfires highlight that energy use and energy efficiency are not just about mitigation of emissions but about climate change adaptation.
PG&E’S 2019 blackouts following the California wildfires affected an estimated 2.7m people
Pacific Gas and Electricity (PG&E) cut power to 940,000 homes and businesses, affecting as many as 2.7 million people, the largest planned blackout in the utility’s history. The blackout was a measure to prevent more wildfires from starting.
Planned rolling blackouts have been used in major urban centers during heat waves to manage demand on the system stemming from air conditioning use. Energy service companies have an opportunity to prepare businesses and enable climate resilience through monitoring energy use and identifying energy storage solutions that will kick in when the electricity grid network fails.
An indicator of the demand for energy management services is investment. A global report from 2018 shows, that the North American energy management market is valued at US$6,952.4 Mn.
The energy management market is expected to grow as provincial, and state-level governments in Canada, and the US implement policies and programmes that incentivise businesses, industry, and households to use less energy.
Local governments in Canada and the US are setting targets for energy efficiency and renewables. As technology advances – the proliferation of energy management software, smart grids, new fuel technology – the demand for expertise uniquely provided by energy service companies will rise.
Source: EPRI, State-Level Electric Energy Efficiency Potential, 2017
In the US alone, estimates stand at 741,000 GWh savings by 2035 according to a study conducted by the Electric Power Research Institute (EPRI), “with substantial savings from residential, commercial and industrial sectors,” says EERE.
Energy service companies have an opportunity to prepare businesses and enable climate resilience through monitoring energy use and identifying energy storage solutions that will kick in when the electricity grid network fails.
As governments in the US and Canada introduce carbon prices, and policies to promote energy efficiency the need for energy management companies to advise business and industry will continue to grow. More critically, as consumers demand less carbon-intense products, the industry will need to respond and become more transparent in reporting their energy use, and its sources.
And, as transparency becomes increasingly important for businesses to have longevity in the new green economy, energy management professionals, including energy service companies are turning to advanced data, analytics and monitoring technology to analyse energy consumption trends, conduct energy audits in facilities and buildings; measure, verify and evaluate energy conservation measures; forecast savings, ROI and track savings in real-time on behalf of their clients.
Our platform – Wattics energy management software for ESCOs – is a ‘swiss-army-knife’ for energy service professionals looking to help their customers save energy, money, identify areas of waste and inefficiency, evaluate energy efficiency projects, benchmark building performance and so much more.
Don’t you think its time to help your customers unleash the true potential of their energy data?
About the Author:
Sabrina Dekker is a climate change researcher and holds a DPhil from the UCD School of Architecture, Planning and Environmental Policy, Ireland. Dekker also holds a Master of Public Affairs from Sciences Po Paris, a Masters in Public Policy from the Lee Kuan Yew School of Public Policy (Singapore) and a BA from the University of British Columbia.
About Wattics:
Wattics provides a powerful enterprise cloud energy management platform for energy service companies, energy consultants, analysts, auditors, and engineers to manage bulks of metered data, spot business energy inefficiencies, increase sustainability and reduce CO2 emissions. The white-labeled energy analytics allows collecting utility/IoTs/sub-meter data, forecast savings, benchmark portfolios of buildings KPIs, measure and verify energy compliance and efficiency projects with industry standards (eg. ISO 50001, LEED, IPMVP), analyse tariffs & more.
