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NATIONAL ASSOCIATION OFELECTRICAL DISTRIBUTORS
Smart Energy Management Systems: Unlocking Opportunities for Growth
EDUCATION &RESEARCH FOUNDATION
EXECUTIVE SUMMARY
The Smart Energy Management System (SEMS) market is an important strategic opportunity for electrical distributors.
While still in the early stages of adoption, US residential and commercial SEMS market exceeds $3.5B today and is forecasted to surpass $8.3B by 2020.
Market growth is underpinned by strong and accelerating customer demand, and driven by improved solution economics for customers, regulatory compliance, and environmental sentiment.
Distributors perceive SEMS as critical to their company’s success; it is an opportunity for both competitive differentiation and to evolve traditional distributor business models.
While most electrical distributors are taking some steps to capitalize on the SEMS opportunity, few believe they are executing against a fully-developed strategy.
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•
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EDUCATION &RESEARCH FOUNDATION
The SEMS market consists of lighting and HVAC sensing, control, and automation technology
SEMS Market Definition
Drainage Water Reuse System
Elevator Monitoring System
Video MonitoringSystem
Room Access Control System
Disaster Prevention System
Building Energy Management Software
MO
NIT
OR
ING
/ C
ON
TRO
LA
UTO
MA
TIO
NA
CTI
VA
TIO
N
Lighting Control Systems
Controllers
Sensors (occupancy, light)
Batteries
Display Devices
HVAC Control Systems
Controllers
Sensors (temp, humidity, CO2)
Batteries
Display Devices
Other EMS Systems1 (e.g. plug load control)
Controllers
Sensors
Batteries
Display Devices
Smart appliances
SEM
S M
arke
t
Light Bulbs, Light Fixtures, Wiring,
Other
Fans, Condensers, Wiring, Other
Traditional appliances
EDUCATION &RESEARCH FOUNDATION
Most electrical distributors are actively developing and executing a SEMS strategy
MOST DISTRIBUTORS REPORT THAT THEIR SEMS STRATEGIES ARE MODERATELY OR VERY WELL DEVELOPED
HOWEVER, MOST DISTRIBUTORS BELIEVE THEY FALL SHORT OF BEST PRACTICES
Survey Question: How developed is your company’s Smart Energy Solutions strategy?
46%
27% 18%
6% I Don't Know
Not Developed
Slightly Developed
Moderately Developed
Very Developed
3%
EDUCATION &RESEARCH FOUNDATION
Distributors report that SEMS has been a growth engine for them, and expect that trend to accelerate
18.9%
Much faster
Slightly faster
About the same
Slightly slower
39.6%
30.2%
11.3%
HISTORIC SEMS SALES GROWTH, RELATIVE TO REST OF COMPANYLast 3 years 2014-2017
Source: HLSC Analysis of NAED member survey 2017
EXPECTATIONS FOR SEMS FUTURE SALES GROWTH
Don't know
Significantly increase
Slightly increase
Stay about the same
64.4%
Next 3 years 2017-2020
3.4% 5.1%
27.1%
EDUCATION &RESEARCH FOUNDATION
SEMS Segmentation SEMS are a part of all markets in the electrical distribution channel: residential, commercial and industrial. Due to the extensive scope of the SEMS topic, this study focused on resi-dential and commercial segments. Some of the insights shared in the SEMS survey taken by NAED members are reflected here. The full survey analysis is in Part 1 of Smart Energy Systems: Unlocking Opportunities for Growth.
27.1%
End customers decide if and how to include SEMS in their retrofit plans
Architects & Engineers specify
types of SEMS to be included
in project
4
Contractors perform detailed engineering
and decide what types of SEMS will be
included in project
5
6
NEW
CO
NST
RUC
TIO
NRE
TRO
FIT
DIY Retrofit
Custom Single-Family Homes and
Large Retrofits
1
New Tract and Multi-Family
Homes
2
3
Residential SegmentBy type of home and project
Commercial SegmentBy project type and decision maker
EDUCATION &RESEARCH FOUNDATION
Residential SEMS segment is substantially smaller than commercial, but is growing at a rapid pace
27.1%
RESIDENTIAL SEGMENT COMPRISES <15% OF MARKET…
Residential
Commercial
2015
3.1
0.5
3.5
2020
7.1
1.2
8.3North America, USD Billion
19%
EDUCATION &RESEARCH FOUNDATION
Smart home purchases are concentrated in early technology adopters
SMART HOME SYSTEM ADOPTION, BY TECHNOLOGY ADOPTION SEGMENT
Have Not Adopted Smart Home Devices / Systems
Adopted Smart Home Device / Systems
Innovators Early adopters Early majority Late majority Mainstream
Millions of Households1, 2014
54%
6.3
46%
79%
20.4
21%
89%
37
11%
95%
24
5%
96%
9.7
4%
Self-described Technology Adoption Segment
EDUCATION &RESEARCH FOUNDATION
Commercial segment represents a $3.1B opportunity, and is concentrated in new construction projects
COMMERCIAL SEGMENT COMPRISES 85%+ OF SEMS MARKET…
Residential
Commercial
2015
3.1
0.5
3.6
2020
7.1
1.2
8.3North America, USD Billion
18%
EDUCATION &RESEARCH FOUNDATION
As Electrical Distributors look to advance their SEMS business, addressing key barriers to adoption will be essential
COMMERCIAL SEMS ADOPTION BARRIERS (AVERAGE RATING)
Upfront costs too high
End customers unaware of benefits
Architects/ Engineers lack technical knowledge
Architects/ Engineers unaware of benefits
Savings potential too low
Integration challenges
Security concerns
Technology not yet sufficiently developed
Other
Despite cost declines and increasing benefits of rapidly evolving SEMS solutions, greater education and awareness will be critical to driving commercial adoption.
NoImpact
LittleImpact
ModerateImpact
HighImpact