New analysis from Frost & Sullivan, North American Performance Contracting Markets, reveals that the market was worth $3.44 billion in 2004 and expects to reach $6.26 billion in 2010.
Energy-related management projects do not rank very high on most Canadian and U.S. business' list of priorities, as the returns on investment are not immediate. Moreover, the risk, expense, and time are huge deterrents to installing energy service equipment in companies.
Many companies are concerned about the long-term viability of energy efficiency savings. This is especially true when weighed against the downtime caused by installation and their reluctance to give up control of the environmental conditions in the facility.
Once end users are more knowledgeable about energy savings, not only performance-contracting companies see increased revenue, but also the traditional concept of buildings as liabilities is likely to change. In addition, they will be recognized as assets.
Both building owners as well as PC companies have received a boost with the Governmental Accounting Standards Board (GASB) issuing a guideline, which states that buildings older than 20 years cannot report it as a financial asset. However, the GASB allows a second consideration, if a plan for reinvestment is present in the building and creates tremendous opportunities for PC.
Other federal programs that expect to affect the PC market are the Energy Policy Act (EPAC) of 1992, Executive Orders 12902 and 13123. These legislations mandate a 30.0 percent reduction in energy-related expenditure for all federal buildings by 2005 and a 35.0 percent reduction by 2010.
These laws have generated a windfall for energy management strategies, which are fast becoming popular ways to achieve significant energy savings.
The Senate has not reauthorized expired projects such as the Energy Savings Performance Contracting (ESPC), which is expected to conserve enough energy to heat and light 200.0 million homes in a year and save $4.00 billion in energy bills. There could well be a surge in the ESPC market when the bill is reauthorized, especially due to the huge backlog of projects on hold since the project expired.
With business and technological advancements, there will be a greater need for skilled personnel to maintain quality and productivity. Unless PC companies find experts for both energy management as well as standard IT practices, it could be difficult to expand operations without mergers and acquisitions.
North American Performance Contracting Markets, a part of the SVC9343; SVC9449; SVC9450 subscription, provides an overview of and outlook for the PC markets. The study is segmented into markets for contracting, federal, state, and local municipalities, industrial, K-12, universities, healthcare, commercial and others. The study enables companies to align their competitive strategies to exploit marketing gaps and maintain revenue growth.
