One of the smart grid's top ten trends to watch according to Pike Research, the demand response market will continue to transform in the years ahead.
The curtailment service provider (CSP) business model, as pioneered by companies such as EnerNOC, has been an interesting and important path toward the more efficient use of grid resources. However, just as personal digital assistants (PDAs) and cell phones are no longer separate devices, Pike Research believes that demand response (DR) will become an application within a company’s broader energy management platform or service, transforming today’s pure-play CSP market.
Some CSPs, including EnerNOC, are already moving to offer a broader suite of energy management services. Vendors in adjacent markets will target demand response directly or in partnership with local utilities using their own products or via acquisition of smaller high-tech CSPs. Companies in adjacent markets, including building and energy management systems (BEMS/EMS), IT, and communications, are already touching customers who demand energy efficiency products, solutions, and services. These companies can therefore capitalize on existing customer relationships while leveraging the smart grid technology investments being made by utilities (such as AMI).
Most influential in spurring this shift from traditional load curtailment and peak load shifting will be the entrance of BEMS, EMS, and IT players that currently do not offer curtailment as a standalone service. BEMS from Johnson Controls, Honeywell, and Siemens will continue to provide the electro-mechanical building optimization services they have historically offered, with a more acute focus on energy management. Additionally, these large OEMs may partner with or acquire specialized energy efficiency technology companies with deep analytical abilities (e.g., Optimum Energy).
The entrance of EMS players that do not currently provide clients with standalone DR will also shake up the industry. Firms like Minneapolis-based Verisae will provide both a software-as-a-service (SaaS) and a software play – thereby increasing visibility to the building (or a portfolio of buildings) and enhancing building optimization. For example, Verisae will provide end users with an EMS (of which DR is a component), asset management, and carbon management – all on the same backbone.
Additionally, the major IT companies, notably Cisco and IBM, are currently analyzing the EMS space. They will significantly disrupt the traditional DR market – providing devices that will be deployed on an open network that is integrated with a BEMS. This will increase the amount of granular energy consumption data and thus expand the opportunity for DR services. The powerful combination of Cisco’s EnergyWise switching technology with IBM’s Tivoli software enables the management of the consumption of IP-compliant devices on the network. Such integration offers the ability to manage BEMS assets (HVAC, lighting, and security) and provide real-time-pricing (RTP) demand response. The benefits from this shift should be large, as commercial buildings represent a significant portion of overall electricity consumption, but have yet to fully leverage available technology to manage that consumption. This transition will help market players access this low-hanging fruit provided by demand response.