The Energy Efficiency Opportunity

The Energy Efficiency Opportunity

          
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The Energy Efficiency Opportunity

Winning Strategies for a High-Growth Market
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    The potential for energy efficiency (EE) measures to deliver vast economic and environmental benefits is well understood. Yet the adoption of EE measures worldwide has been much slower than anticipated.

    That is poised to change. We believe that, following a visible uptick in market activity in recent years, the EE industry is likely to see double-digit annual growth through 2020, led by particularly strong expansion in the commercial sector. The industry’s robust growth will be driven by a supportive mix of favorable regulation; better access to capital for consumers of EE products and services; increasing availability of public funding through public subsidiaries and utility programs, which is helping to make EE projects more attractive financially; and technological progress. Today’s record-low interest rates in many markets are also providing a near-term boost to these projects’ financial attractiveness.

    Not all countries and market segments will be equally attractive, however. Players will have to understand the heterogeneous needs of the different markets and market segments and tailor their offerings accordingly.

    Strong growth will set in motion dynamics that reshape the industry. Drawn by the industry’s increasingly favorable prospects, market entrants from different arenas—including utilities, original equipment manufacturers (OEMs), and facility management companies—will challenge incumbents. As companies professionalize in response to rising competition, and as business models converge, players seeking a competitive edge will strive to develop new capabilities. The EE industry will ultimately experience a wave of consolidation, during which any number of businesses, especially those that lack sufficient size, will capitulate.

    Change creates opportunity, however, and there will inevitably be major winners as well. Innovative businesses that develop new skills, reach scale quickly, and position themselves strategically stand to not just survive but thrive in this new landscape.

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