Energy management systems: The eco-friendly tool that’s here for the long run

In the modern, environmentally conscious age, conserving energy is a priority for businesses and governments. Energy management systems (EMS) are frameworks that allow energy consumption to be monitored and controlled with precision. Businesses are able to identify opportunities to save energy and costs, ultimately helping the environment. As the climate crisis edges higher up the global agenda, the market for energy management systems continues to climb. BCC Research estimates the market will reach $75.3 billion by 2027, growing at a compound annual growth rate of 14.6% between 2022-2027.

Let’s dive into the key factors propelling this industry forward.

Increasing usage of smart grids and smart meters

Governments across the world are increasingly modernizing their energy grids by adopting smart grid solutions in a bid to save energy and costs. Such moves are in line with the growing propensity toward achieving energy efficiency and adopting renewable energy.

In order to tackle climate change and increase energy efficiency, the European Union set itself a target to ensure that 80% of EU consumers use smart meters by the end of 2020. The move aims to accelerate the use of cleaner energy and lower energy consumption. However, as of December 2022, only about 56% of the electricity customers deployed smart meters.

In keeping with this, Endesa S.A., a Spanish multinational electric utility company, secured an additional $269.8 million (€250.0 million) from the European Investment Bank, as of January 2023. The company has secured a second round of “sustainable” financing totaling $545 million (€500 million) for the modernization and growth of Spain’s distribution networks with smart technologies in order to improve supply security and quality from now until 2024.

North America is also experiencing significant growth in the adoption of smart metering solutions and smart grid investments. According to the Institute for Electric Efficiency, by the end of 2024, the adoption rate of smart meters in the region is expected to reach over 80%, up from around 60% in 2018. China and Japan are leading in smart meter penetration in the Asia-Pacific region, and the Indian government is emphasizing the adoption of smart metering in the country.

Apart from smart metering, global investments in smart grids are increasing significantly. According to the US EIA, the global smart grid electricity grid infrastructure investment in 2021 reached $290 billion, surpassing the $270 billion high set in 2019.

Effective tracking and management capabilities

Another factor driving the EMS industry to new heights with effective new software technologies. Enterprises and manufacturing plants can track their energy requirements more accurately and in real-time with advanced software-based management systems than with legacy monitoring systems. These systems aid in the management, reporting and discovery of unique insights that can help operators manage energy consumption, transmission and monitoring.

These features give organizations more control over their demand and allow for easier management, which, in turn, encourages such businesses to invest in energy management software. The benefits of deploying these software solutions include lowered cost of managing energy, ease of compliance with energy consumption reporting mandates, improved reputation of the company among peers and better stakeholder relationships.

The skills gap

Even though there’s significant technological growth among enterprise developments and adoption, there’s still a skills gap when it comes to having professionals and users capable of understanding the technology.

There is also a significant skill gap when it comes to in-house talent. According to the study by SnapLogic, among the great number of firms that have invested in EMS solutions, more than half lack the required in-house talent to execute their strategy. The study also found that about 68% of the firms are pouring in more money on training and upskilling their employees.

A systematic literature review (Knowledge Demands for Energy Management in the Manufacturing Industry; published May 2022) conducted by researchers from the Department of Management and Engineering (IEI), Division of Energy Systems, Linköping University indicated that technical knowledge is the main type of knowledge used in energy management and also highlighted a paradigm shift toward Industry 4.0. Energy management uses leadership knowledge, so combining these types of knowledge could help move beyond conventional knowledge and toward new types of knowledge that maximize the potential of energy management. However, the lack of such knowledge is a concern.

Not just the workforce, but a significant share of users must be upskilled as well in order to work on these platforms and operate them. There are various initiatives being undertaken by enterprises operating in the EMS market to reduce the skill gap. According to the World Economic Forum, the latest technologies are creating demand for new worker skills and competencies.

Identify opportunities for energy management systems

The market for EMS represents a long-term trend that will transform the face of businesses in years to come. Market growth is considerable, and with governments becoming more environmentally conscious, this trajectory will only intensify.

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