Solving the Growth Paradox: Navigating a Maturing Energy Efficiency Market

The U.S. energy efficiency industry has always dealt with a growth paradox. As efficiency measures drive down energy use in commercial and industrial buildings, the return on investment for future interventions compress. This self-cannibalizing effect presents a strategic challenge: how do energy service companies sustain growth in a shrinking total addressable market?

Growth in a Shrinking Market

Commercial building energy intensity appeared relatively stagnant before COVID-19, with the changes in where we work from the pandemic driving growth heavily negative. Prior to our shift in workspace, nearly all C&I space saw reduction in total energy end use – a proxy for the total energy efficiency market. The result? A lower growth, higher completion market with a changing appetite for energy efficiency technologies.

Opportunities in HVAC, Digital Loads, and Post-COVID Shifts

Yet, amid this maturity, new pockets of opportunity appear to be emerging:

HVAC: Heating, ventilation, and cooling continues to dominate commercial energy, especially in high-volume spaces like warehouses. Energy efficiency programs targeting HVAC retrofits may remain a viable path for impact and revenue.

Digital Loads: A growing share of energy use now stems from digital infrastructure - personal computers, security systems, and especially servers for data processing. These “non-traditional” end uses are expanding across all C&I buildings, offering fertile ground for novel, tech-integrated efficiency strategies.

Re-Baselining Post-COVID: Return-to-office may show a return to historical usage profiles. This creates a critical moment for building managers to re-baseline and re-evaluate their energy performance targets - potentially reinvigorating demand for fresh energy audits and retrofit strategies.

Finding Value in a Saturated Landscape

Success may come from leveraging HVAC-heavy sectors, aligning with digital trends, and offering value-added services. While the growth paradox remains, honing in on key energy efficiency measures and C&I sub-categories can keep energy service companies driving critical investments in load reduction.