The Carbon Management Market's Sweet Spot: Utilities

The Carbon Management Market's Sweet Spot: Utilities

Image CC licensed by Flickr user Bert K

Electric utilities find themselves on the regulatory front lines of addressing climate change in the U.S. and abroad.

The challenges they face are broad: aging infrastructure, shifting environmental requirements, and the need to both curtail power demand while also preparing for future demand in ways other than boosting generation.

All of these factors combine to make the sector a prime market opportunity for carbon management software and service vendors, according to Pike Research. The firm predicts the worldwide utility-related carbon management market to grow from $141 million in 2010 to $788 million in 2017, 44 percent of it in the U.S.

"For years, the U.S. electric utility sector has represented a major market opportunity for vendors offering products and services related to environmental and carbon footprint issues," Pike Research said in an excerpt of the report, "Carbon Management in the U.S. Electric Utility Sector: Business Drivers, Policy Factors, Competitive Landscape, and Market Forecasts for Carbon Management Software and Services." "This it is not unusual that most vendors have experienced their first start as a carbon management provider in the utility sector."
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The hopeful view is shared by both new and longtime carbon management software firms. Enviance, founded in 1999, says some 35 percent of the nation's utilities rely on it for help with carbon management, including American Electric Power (AEP), which uses the Enviance system to monitor greenhouse gas emissions at dozens of its power plants.

Meanwhile, newcomer Hara is posting impressive results with its growing list of clients. For example, the city of Palo Alto, the state's sole city-owned utility that operates its own services for electricity, natural gas, water, wastewater and fiber optics, saved $500,000 in energy costs in the year since it implemented Hara's Environmental and Energy Management software, while also reducing greenhouse gas emissions by 8 percent. The Northern California city plans to reduce emissions 15 percent over the next three years.

"With proposed legislation to regulate utilities through a restricted trading system for pollution rights, it's likely that we'll see more utilities looking for energy and environmental software to not only help provide auditable visibility into their operations, but also an understanding of how to reduce their emissions in a meaningful way across their organizations and provide energy efficiency opportunities and best practices to their customers," said Hara Chief Marketing Officer Chris Farinacci in an email message. "It means the shift from merely collecting data to better leveraging and acting upon it."

Michael Meehan, president and CEO of carbon management software firm Carbonetworks, said utilities have collected data for years, but it's only been recently that the data they report has become a corporate priority.

"In the Utility sector, data is not the problem -- their problem is getting intelligence from that data, and providing the transparency to stakeholders and the public on what they are doing with it," Meehan said via email.  

Carbonetworks' work with utilities is rooted in pre-regulated markets around the world where climate change policies are just being formulated.

"We work with several governments and public sector organizations as the 'software platform' on which their carbon, energy, or sustainability platform is deployed, so utilities usually engage us in participating with government policy through our platform, rather than in response to it," Meehan said.

Some states participating in the Western Climate Initiative use the company's platform to set carbon allocations for businesses in their regions.

"Now the utilities affected are looking at using the platform to meet (or plan to meet) those caps and targets," Meehan said.

Pike Research previously predicted the carbon management and software market as a whole would enjoy explosive growth over the next 10 years, regardless of the weak agreement forged in Copenhagen. Overall, the market could top $4.3 billion in 2017.

Image CC licensed by Flickr user Bert K.

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