IBISWorld Identifies Ways to Cut Energy Use, Costs

Businesses and consumers alike are feeling the heat from rising utility costs, but commercial buildings in particular, such as hospitals, shopping centers and offices, have been taking a significant hit considering they account for about one-fifth of domestic energy consumption. While the utilities price index, published by the Bureau of Labor Statistics, has increased in line with the improving economy, commercial building energy consumption has also been on a steady upward trend. Even before the recession, energy consumption of commercial buildings grew a whopping 69.0% from 1980 to 2009. Based on projections from the Energy Information Administration, it is estimated to grow another 22.0% from 2009 to 2035.

With the index expected to grow an annualized 2.0% through 2017, businesses will increasingly be looking for ways to cut costs, including through sustainable energy practices. These efforts to cut costs coincide with the Leadership in Energy and Environmental Design (LEED) certification program that encourages building owners to conserve energy, improve indoor air quality and reduce water consumption, which can ultimately help them save money. Pinpointing effective solutions for reducing energy use is challenging, though, so IBISWorld identified four ways to dramatically lower energy use and costs: energy management control systems, window and door installation services, HVAC system construction and maintenance, and solar panel installation. The following assessments of key trends in these markets will help buyers make informed purchasing decisions.

• Energy Management Control Systems: The average commercial building wastes roughly 30.0% of the energy it consumes, with the U.S. Department of Energy (DoE) pointing to lighting as the largest source of electricity consumption in commercial buildings. This wasted energy is largely the result of inefficient use of heating, ventilation and air conditioning (HVAC) and lighting. With energy management control systems, users can reduce energy consumption by monitoring and controlling HVAC and lighting usage.
• Window and Door Installation Services: The DoE estimates that roughly one-third of cooling costs are attributable to heat transferred through windows. By installing energy-efficient windows, businesses can both limit the amount of solar heat coming through windows during hot seasons and trap that heat indoors during colder seasons, effectively reducing cooling and heating costs. Businesses can also install energy-efficient doors, which prevent cold air drafts and provide insulation.
• HVAC System Construction and Maintenance: HVAC systems are the second-largest source of energy consumption in commercial buildings. Installing new energy-efficient HVAC systems can significantly reduce energy costs.
• Solar Panel Installation: Although only about 1% of U.S. energy currently comes from solar installations, this share represents an increase from just three years ago thanks in part to government-backed initiatives and incentives. By 2030, SunShot Initiative, a national collaborative under the DoE, projects that share to hit 14% as government initiatives continue to help push down the prices of solar-generated power and related systems. On April 17, 2014, the Obama administration announced a $15.0 million Solar Market Pathways program aimed at helping state, local and tribal governments install solar panels and other infrastructure to help reduce greenhouse gases, energy consumption and costs. The government’s push toward solar power, combined with the White House’s plans to encourage federal agencies to adopt sustainable practices, will continue to drive demand for solar panel installation services in the three years to 2017.

Source: IBISWorld Inc.