U.S. Commercial Building Energy Efficiency Biz Worth $5.6B a Year

by | Jan 6, 2010

pike escoCompanies providing energy efficiency consulting services to U.S. commercial building owners are expected to make about $5.6 billion a year. About 75 percent of the revenues come from implementing a suit of energy efficiency measures, according to “The U.S. Energy Service Company Market” study from Pike Research.

The market is expected to grow by leaps and bounds, however. Pike Research projects 250 percent growth to $19.9 billion by 2020.

About 80 percent of the current market is tied to projects in the institutional and federal sectors, spurred by the injection of nearly $11 billion in incentives, grants and lending opportunities through the American Recovery and Reinvestment Act of 2009 (ARRA).

“Private commercial buildings are the next frontier,” said Research Analyst Jevan Fox. “However, private building owners still lack the proper financing structures and incentives to take advantage of this opportunity.”

The market is expected to be boosted by the acceleration of Property Assessed Clean Energy (PACE) financing, in which companies pay a higher property tax in exchange for financing of energy efficiency measures.

In a scenario where more PACE financing becomes available, at the same time as companies face higher costs from cap-and-trade legislation, Pike Research estimates the market would balloon to $37.6 billion by 2020.

Companies are finding increasing benefits from building retrofits.

A recent retrofit of an office building in Winchester, England, resulted in a 70 percent drop in energy consumption, a 70 percent increase in staff utilization and a 30 percent reduction in overall office space needed, meaning that excess office space can be leased out.

In another estimation of the market, green building currently accounts for five to nine percent of the retrofit and renovation market activity by value, which equates to a $2 billion to $4 billion marketplace for major projects, according to a new report from McGraw-Hill Construction. By 2014, this share is projected to grow to 20-30 percent, making it a $10 billion to $15 billion market for major retrofit projects.

Stay Informed

Get E+E Leader Articles delivered via Newsletter right to your inbox!

Share This