Demand response continues to evolve as the smart grid's "killer application," leveraging technology infrastructure to deliver measurable value to utilities, grid operators, and customers alike. The demand response market encompasses hardware, software, and services, but it is the services sector that is defining the future direction of the business, both within the United States which is the leading market for DR, as well as in Europe and Asia Pacific, where the DR market is developing quickly. The DR services market is segmented into three main areas: curtailment services, systems integration/consulting services, and outsourcing services.
According to a new report from Pike Research, global revenues for demand response services will experience strong growth over the next five years, increasing from just less than $1.3 billion in 2011 to more than $6.1 billion by 2016. The cleantech market intelligence firm forecasts that the curtailment services segment will continue to be the largest of the three key segments, representing approximately two-thirds of the total market opportunity through 2016.
"Market forces driving demand response growth include increasing demand for electricity in every region over the long term, growing constraints on new generation, the need for greater energy efficiency and energy cost savings, and the introduction of new technologies," says senior analyst Marianne Hedin. "Smart meters, virtual power plant systems, microgrids, and the integration of renewable energy resources will all increasingly rely on DR to operate effectively and unlock the potential of their technological capabilities."
Hedin adds that, in the midst of this market expansion, the competitive landscape for DR is now consolidating, evidenced by a slew of acquisitions in 2010 and 2011. The large and global players in this market include power product, equipment, and enterprise energy management vendors like ABB, Honeywell, Itron, Johnson Controls, Schneider Electric, and Siemens; energy services companies (ESCOs) like Constellation Energy, and major curtailment service providers such as EnerNOC and Comverge. All of these companies are trying to make further inroads into the burgeoning DR market and shore up their portfolios by acquiring smaller players with niche expertise in the DR space. As the market continues to mature, Hedin expects to see more acquisitions by these and other leading players in the future.
Pike Research's report, "Demand Response," provides an in-depth examination of current demand response market dynamics, along with analysis of emerging market opportunities, on a global and regional basis. The study includes worldwide forecasts of market size and growth prospects for curtailment services, systems integration and consulting, and outsourcing services for commercial, industrial, and residential markets. Detailed assessments and profiles are included for 21 major demand response vendors.