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Big buildings already have plenty of energy management technology, and household energy efficiency is the focus of dozens of VC-backed startups and IT giants alike. But who’s tackling the small and mid-size commercial building market? Fast food joints, retail chains, strip malls, small office parks and other “mushy middle” customers represent a big untapped market — but contenders will have to simultaneously bring down costs and pump up customer service to capture it.
As I wrote in my weekly update at GigaOM Pro (subscription required), most of today’s commercial building energy management is limited to data centers, factories, big offices and institutional buildings. Smaller commercial buildings tend to lack sophisticated building sensors and controls, and they also lack on-site facility managers to run them. In a way, that makes them more like homeowners, who want a “hands-off” solution that’s also cheap to implement.
Those characteristics could open up the small commercial building market to some of the dozens of home energy management startups that have sprung up in the smart grid space, as well as the IT giants like Google and Microsoft who are targeting homes. Austin,Texas-based Incenergy is one example — it provides energy management software to both utility-sponsored residential deployments and to commercial customers, and right now “the commercial market is the most promising side of the market,” CEO Barry McConachie told me last week.
Incenergy’s “sweet spot” is in the 35,000 to 75,000 square foot range, but it targets commercial customers up to the 200,000 square foot range or so, McConachie said. “Beyond that, you get into some very heavily entrenched systems” from building management system (BMS) vendors like Siemens (s S), Schneider Electric, Honeywell (s HON) and Johnson Controls (s JCI), he said. Another startup with sights on both homes and small businesses is San Diego, Calif.-based Advanced Telemetry, which provides HVAC controls for fast food chains as well as home energy management in partnership with General Electric (s GE).
At the same time that home energy startups are looking up at small commercial buildings from below, big power players in energy management are moving down from above. Schneider Electric has partnered with Verisae, a startup that’s specialized in grocery store energy controls. Demand response market leader EnerNOC (s ENOC) recently bought SmallFoot, a wireless controls startup aimed at the small and mid-size office market, and Siemens last week bought Austin-based startup Site Controls, which adjusts HVAC systems by monitoring carbon dioxide levels in rooms and manages multiple sites to turn down energy use when the grid is under stress.
To reach small and mid-size commercial customers, however, startups and corporate giants alike will have to meet dual needs of low cost per square foot and high levels of customer support. Compared to managing larger buildings, smaller-scale energy controls “aren’t complicated from an applications standpoint,” said Bob Zak, president of Seattle-based commercial and industrial site energy management company PowerIt Solutions, told me last week. “But it’s got to be clean, got to be done with a lot of grace, and it’s got to be coupled with good services.”
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