Energy Efficiency - Balancing business opportunities with threats to revenue

Table of Contents

• DATAMONITOR VIEW
  • CATALYST
  • SUMMARY
• ANALYSIS
  • Increased competition, higher energy prices and tighter regulation make an energy services offering an imperative for utilities
    • Utilities should now focus on how to structure an energy services offering
    • Energy efficiency is both a client service and a utility cost-saving activity
    • In both competitive and concentrated markets, an energy services offering makes strong business sense for utilities
    • Increased loyalty, product differentiation and closer business relationships flow directly from energy services activities
    • B2C energy services, even without supportive tariff regimes, can deliver customer loyalty
  • Energy services can be marketed as a part of outsourced energy management
    • The requisite conditions for a boom in energy management outsourcing are emerging across European markets
    • Energy services can be marketed as business outsourcing, not simply a vehicle for energy efficiency improvement
  • The energy services market is growing quickly across Europe
    • Energy liberalization and rising prices mean the energy services market will grow faster than GDP and power demand growth
    • By 2008, Europe' s potential energy services market will be over €240 billion
    • For some utilities, revenue from energy services is far outpacing overall growth revenue
    • Suez is a market leader in terms of decoupling a large portion of its revenues from energy sales
    • No utilities have yet emerged to dominate the European energy services market
  • The EU' s Energy Efficiency Directive imposes an obligation on member states to implement energy efficiency measures by 2008
    • The EU' s Energy Efficiency Directive imposes an obligation on member states to implement energy efficiency measures by 2008
    • Most EU countries have failed to submit EEAPs to the EC by the agreed deadline of June 30, 2007
  • Successful energy services offerings must carefully track switching rates and rules
    • Energy reduction tariffs are still not commonplace in European utility markets
    • Utilities launching energy services offers must beware of the customer switching rules of regulators
    • High rates of switching by non-residential power customers will impact upon the viability of energy service offers in some markets
    • High rates of switching by non-residential gas customers will impact upon the viability of energy service offers in some markets
• APPENDIX
  • Definitions
  • Further reading
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Figures
    • Figure 1: Energy services offerings reduce energy sales but increase customer loyalty, and may increase overall utility revenue
    • Figure 2: Suez' s full range energy services offering for industrial clients
    • Figure 3: Power demand, GDP and energy services market growth, 2006-08
    • Figure 4: Forecast energy services market size in 2008
    • Figure 5: Increase in energy services market, 2006-08
    • Figure 6: Utility revenue growth 2005-06: corporate versus energy services revenue
    • Figure 7: Utility revenue versus revenue from energy services in 2006
    • Figure 8: Energy services market shares in 2006
    • Figure 9: EEAP submission status across the EU
    • Figure 10: Energy reduction tariffs offered by European utilities
    • Figure 11: Forecast electricity customer switching rates, 2008
    • Figure 12: Forecast gas customer switching rates, 2008