PUBLISHER: KBV Research | PRODUCT CODE: 1385042
PUBLISHER: KBV Research | PRODUCT CODE: 1385042
The Global Smart Demand Response Market size is expected to reach $79.6 billion by 2030, rising at a market growth of 17.1% CAGR during the forecast period.
A robust economy, characterized by rising GDP, increasing consumer spending, and low unemployment, creates favorable conditions for commercial expansion. Consequently, the commercial segment captured $5.2 Billion revenue in the market in 2020. As individuals and businesses experience improved financial stability, they are more willing to invest, expand, and consume goods and services. Adequate infrastructure, including transportation, energy, and communication networks, is essential for businesses to expand. Regions with well-developed infrastructure can attract commercial investment and growth. High-speed internet and digital connectivity are also crucial in the modern business environment.
The major strategies followed by the market participants are Partnerships as the key developmental strategy to keep pace with the changing demands of end users. For instance, In April, 2023, Enel S.p.A signed a partnership with Phoenix Energy Technologies. The partnership would allow Enel to serve its customers with complex energy systems. Moreover, In February, 2023, Siemens AG signed a partnership with EnergyHub, to provide utilities with next-generation DER management solutions. The two companies would achieve the aim by combining each other's network expertise and grid-edge capabilities.
Based on the Analysis presented in the KBV Cardinal matrix; Oracle Corporation is the forerunner in the Market. Companies such as Honeywell International, Inc., Siemens AG, Schneider Electric SE are some of the key innovators in Market. For Instance, In June, 2021, Schneider Electric SE came into partnership with SolarX, to deploy microgrids in Francophone Africa. The partnership would enable Schneider Electric to expand its footprint in Africa.
Market Growth Factors
Growing industrial and commercial industry
Automation, artificial intelligence, and the Internet of Things (IoT) have transformed manufacturing and production processes in the industrial sector. These advancements improve efficiency and open up new possibilities for product development and customization, thereby driving growth. A growing global economy leads to increased consumer demand for products and services. As consumer spending rises, industrial sectors catering to these demands, such as consumer goods, automotive, and electronics, experience expansion. Economic growth is a significant driver for industrial sector growth. As the industrial and commercial sectors expand, governments and regulatory bodies often introduce policies and incentives to encourage participation in DR programs. This support can include financial incentives, energy efficiency targets, and simplified participation processes. Expanding the industrial and commercial sectors substantially and positively impacts the market. As these sectors continue to grow, the market will witness growth.
Rapid increase in energy costs
As energy costs rise, consumers and businesses are motivated to find ways to reduce their electricity bills. Its programs offer a solution to mitigate these rising costs by enabling them to adjust their energy consumption during peak pricing periods. Participants can achieve significant savings by reducing energy use when prices are high. Rising energy costs have created a financial incentive for consumers and businesses to participate in DR programs actively. Many utilities and grid operators offer financial incentives, such as bill credits or reduced rates, to those who curtail their energy usage during peak demand hours. Consumers and businesses are increasingly informed about the environmental and economic benefits of participating in DR programs, leading to greater participation. The expansion of the market can be attributed mainly to the financial incentives and cost-saving opportunities it provides in response to rising energy costs.
Market Restraining Factors
Increasing Adoption of Distributed Energy Resources (DERS)
DERs, such as solar panels and wind turbines, are often intermittent and variable energy sources. This makes it challenging to predict energy availability accurately, which is critical for effective demand response planning and grid balancing. DERs, including energy storage systems and electric vehicles, allow two-way energy flow between consumers and the grid. This bi-directional flow can complicate demand response strategies and coordination. While energy storage can enhance the flexibility of DERs, it can also pose challenges when predicting and managing energy use. The interaction between energy storage and demand response needs careful planning. This congestion can limit the grid's ability to accommodate additional distributed energy generation and storage. With the growing DERs in the industry, it is expected to decline the market growth in the coming years.
Type Outlook
Based on type, the market is fragmented into voluntary and contractual mandatory. The contractual mandatory segment recorded a remarkable revenue share in the market in 2022. Contractual mandatory DR can reduce environmental impact by encouraging participants to reduce their energy consumption during peak periods when fossil fuels are often used to meet increased electricity demand. Contractual mandatory its programs typically target sectors or consumers where grid reliability and stability are critical. While these programs can effectively address grid challenges, they require careful planning, communication, and coordination between program administrators and participants to ensure successful compliance.
Application Outlook
On the basis of application, the market is segmented into residential, commercial, and industrial. In 2022, the residential segment dominated the market with the maximum revenue share. There is a growing need to improve energy efficiency and reduce carbon emissions in residential buildings. For residential customers, demand response (DR) programs entail direct load control of the larger appliances at home, which includes water heaters, pool pumps, and air conditioning systems. Smart buildings are expected to participate in DR programs to protect the electrical grid during high peak energy demand. Reducing loads during high-cost periods is expected to reduce electricity bills, proving advantageous to consumers.
Regional Outlook
Region-wise, the market is analysed across North America, Europe, Asia Pacific, and LAMEA. In 2022, the North America region held the highest revenue share in the market. There is a growing need to manage electricity demand and address peak load challenges. As energy consumption rises, utilities seek innovative solutions to balance supply and demand, reduce strain on the grid, and avoid potential blackouts or disruptions. In California, buildings are foreseen to contribute to the highest peak load. The Demand Response Research Center (DRRC) focuses on commercial and residential applications of technologies for dynamic peak load reduction with different response durations.
The market research report covers the analysis of key stake holders of the market. Key companies profiled in the report include ABB Group, Eaton Corporation PLC, Enel S.p.A, General Electric Company, Honeywell International, Inc., Johnson Controls International PLC, Oracle Corporation, Siemens AG, Schneider Electric SE and Itron, Inc.
Recent Strategies Deployed in Smart Demand Response Market
Partnerships, Collaborations & Agreements:
Apr-2023: Enel S.p.A signed a partnership with Phoenix Energy Technologies, an energy management systems provider, to provide revenue-generating demand response (DR) opportunities for different businesses. The partnership would allow Enel to serve its customers with complex energy systems.
Mar-2023: Enel S.p.A came into partnership with Tata Power Delhi Distribution Limited, a power distribution services provider based in India, to provide solutions for the digital transformation of power distribution grids. The partnership would support India's digitization plans.
Feb-2023: Siemens AG signed a partnership with EnergyHub, a distributed energy resources (DERs) management solutions provider, to provide utilities with next-generation DER management solutions. The two companies would achieve the aim by combining each other's network expertise and grid-edge capabilities.
Oct-2022: Honeywell International, Inc. came into partnership with Microsoft, an American technology company, to provide a complete unified solution for communication and collaboration. The partnership would provide mobile workers with solutions for effective operational coordination.
Sep-2022: Itron, Inc. came into partnership with SmartThings, a Samsung subsidiary, to integrate its industrial IoT (IIoT) network solution with SmartThings' services and solutions. As a result of the partnership, the customers of the two companies would be able to gain deeper insights about their energy use.
Jul-2022: ABB Group partnered with Red Hat, an American software company, to deliver cloud-based industrial operation solutions. The partnership aids the customers of ABB in their operational performance optimization.
Jun-2022: Eaton Corporation PLC partnered with Microsoft, an American technology company, to accelerate applications of its Energy Aware uninterruptible power system (UPS) technology. The partnership would enable the data centers to improve their environmental impact profile.
Mar-2022: Itron, Inc. signed a partnership with Emerson, a technology company, to offer reliable thermostats. The partnership expands Itron's customer base.
Dec-2021: ABB Group came into partnership with Indore Smart City Development Limited, a city development solutions provider, to establish digital Compact Secondary Substations (CSS). The partnership would ensure a regular supply of electricity throughout the city of Surat.
Oct-2021: General Electric Company came into partnership with Nest Renew from Google, a service used for compatible Nest thermostats. The partnership would enable the joint customers of the two companies to reduce their carbon footprint.
Jul-2021: Enel S.p.A announced a partnership with Virtual Peaker, an energy management services provider, to offer smart home energy solutions to utilities in the US. The partnership would fulfill the intelligent energy needs of the North American market.
Jun-2021: Schneider Electric SE came into partnership with SolarX, an Energy infrastructure solutions provider, to deploy microgrids in Francophone Africa. The partnership would enable Schneider Electric to expand its footprint in Africa.
Mergers & Acquisition:
Jul-2023: Johnson Controls International PLC took over FM: Systems, a workplace management and Internet of Things (IoT) solutions provider. The acquisition enables Johnson Controls to strengthen its OpenBlue, a building automation services platform by adding to it FM: Systems' predictive workplace management platform.
Jun-2023: ABB Group announced the acquisition of Eve Systems GmbH, a German smart home products provider. The acquisition aids ABB in providing its customers with smart and energy-efficient homes and buildings.
May-2022: Schneider Electric SE announced the acquisition of Autogrid, an AI-based optimization solutions provider for distributed energy resources (DER). The acquisition strengthens Schneider Electric's capability to offer its customers leading technologies for carbon footprint reduction.
Apr-2022: Johnson Controls International PLC acquired Security Enhancement Systems LLC, a keyless access control solutions provider. The acquisition would allow Johnson Controls to provide keyless access control and data analytics for specialized infrastructure.
Jan-2022: Oracle took over Federos, a leading provider of cloud-enabled, AI-optimized network assurance, analytics, and automation software. With this acquisition, Oracle focused on empowering service providers with AI-optimized service and network analytics, assurance, and automated orchestration.
May-2021: Siemens AG signed an agreement to acquire Padam Mobility, an AI-powered platform provider for paratransit services. The acquisition strengthens Siemens Mobility's intelligent infrastructure portfolio.
Mar-2021: Siemens AG took over C&S Electric, an electrical equipment manufacturer based in India. The acquisition strengthens Siemens' overall range of offerings.
Product Launches and Product Expansions:
Apr-2023: Enel S.p.A announced the launch of Enel Box, a solution that facilitates substation building with eco-friendly materials and fewer components. The solutions facilitate reduced carbon footprint and are easily integrated with urban, rural, and historic areas.
Jan-2023: ABB Group released SSC600 SW, a virtualized protection and control solution including Smart Substation Control. The SSC600 SW offers flexibility in hardware selection and provides protection and control functionality same as ABB's turnkey solution. The product can handle tasks of 30 protection relays.
Sep-2022: Honeywell International, Inc. unveiled Data Center Suite, a suite of outcome-based software solutions used to facilitate worker productivity. The products in the suite include Data Center Manager, Portfolio View, and Honeywell Forge Digitized Maintenance.
Market Segments covered in the Report:
By Type
By Application
By Geography
Companies Profiled
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