Friday, August 31, 2012

Verdantix Says The US Market For Energy And Environment Technology Services Will Reach $2.5 Billion In 2015

By 2015, large firms in the US market will spend $2.5 billion annually on technology consulting and systems integration relating to their energy, environment and sustainability initiatives, according to a new report from independent analyst firm Verdantix. The forecasted level of investment reflects a 47% increase from spending of $1.7 billion in 2012 and a compound annual growth rate of 11% over the 2011 to 2015 period. This compares with a total US market size for all energy, environment and sustainability spending of $39.8 billion in 2012 making technology services 4% of the total market.

“Power utilities will account for a whopping 47% of US private sector spend on energy and environment technology services in 2012” commented Stuart Neumann, Verdantix Senior Manager and author of the report.  “This reflects the growth in smart grid technology services spend which will reach $503 million in 2012 and the boom in smart meter projects represents $385 million of spend. The $4 billion in US stimulus funds targeted at smart meters has been a key driver. Other growth factors revealed in our analysis include a big push by oil and gas firms to strengthen their environmental management systems, an ongoing focus on energy and carbon data management and data-driven facilities energy efficiency. The roll out of large solar parks and utility-scale wind farms is also creating new IT systems requirements.”

The Verdantix report ‘US Sustainable Technology Services Spend 2011-15’, covers spend by 1,833 firms across 11 different energy, environment and sustainability initiatives. Spending on technology services related to six energy management initiatives dominate the market opportunity representing $1.4 billion of the $1.7 billion total in 2012. Technology services in the environmental management and water stewardship market segments will be worth $218 million in 2012. Strong environmental technology services practices such as Deloitte, ERM, Fujitsu Services and Mahindra Satyam will benefit from this spending. The embryonic market for sustainability technology services – covering climate change, sustainability performance management and low carbon transport – captures just $151 million of corporate IT spending in 2012.

“The size and growth rate of the US market for energy, environment and sustainability technology services is sufficient to generate interest from all major technology services firms” commented David Metcalfe, Verdantix CEO. “The problem is that few IT services firms are making money in this market. The opportunities are fragmented across eleven different categories making market entry problematic. And growth rates for supposedly ‘hot topics’ like water stewardship are just 10% per annum over the 2011 to 2015 period. Headline issues like climate change risk management systems will garner just $30 million in spend in 2012 – less than a medium-sized IT outsourcing deal. Only suppliers with a strong market position in sectors like utilities or oil and gas are making a decent profit. New entrants need smarter strategies.”

On May 21, 2012 Verdantix Named Seven Leaders In The US Environmental Services Market Who Meet Customer Needs For Strategic Environmental Innovation ( Through their national reach, end-to-end project management capabilities and investments in enhanced sustainability performance AECOM, AMEC, ARCADIS, CH2M HILL, ERM, SAIC and URS have established themselves as leaders in a field of 20 environmental services providers assessed in the study.

“Leaders in the environmental services market have done two smart things to establish their market position” commented Emilie Beauchamp, Verdantix Industry Analyst and author of the report. “Firstly, they responded effectively to customer demands for environmental innovation and a more strategic approach to environmental management. Secondly, they have invested to enhance their sustainability credentials and technical expertise. CH2M HILL best illustrates the leap from delivering EH&S compliance engagements to differentiating project value with sustainability.”

The Verdantix report, Green Quadrant Environmental Services Providers, contains a detailed assessment on 50 criteria of the 20 most significant players in the US environmental services market. The eight assessment areas covered in the study consist of: remediation, EH&S compliance, environmental impact assessment, EH&S management, transaction services, waste management, product-level environmental compliance and natural resource management.

The seven environmental services market leaders differentiate themselves on five metrics: 1) Availability of multi-disciplinary teams to deliver the entire project without sub-contracting; 2) National presence and delivery capability to speed time to value; 3) Recent acquisitions which have boosted technical expertise; 4) Pre-built environmental innovation ecosystems involving equipment suppliers, standards bodies and universities; 5) Investments in sustainability data collection, reporting and goal-setting which shows they practice what they preach.

As part of the study Verdantix interviewed a panel of customers with revenues totalling $1.2 trillion who said that higher natural resource costs, tight operating budgets, fears over reputational risks and increased concern over the costs of environmental disasters have launched environmental strategies on a new trajectory. Buyers now expect environmental services firms to deliver environmental innovation – not simply compliance. Expectations for innovation include meeting resource efficiency targets, implementing advanced environmental technologies, integrating EH&S with sustainability processes and designing environmental programs that scale globally.

Over the next 2 years, 47% of customers surveyed for the report plan to increase spending on remediation and waste management, 40% of the customers plan to increase spending on transaction services and EH&S compliance. When short-listing providers, 93% of customers consider technical expertise is ‘very important’, 60% regulatory expertise, 60% time effectiveness, 53% industry track record, 53% cost effectiveness and 47% end-to-end project delivery capability.

“Buyers of environmental services have upped their demands. They want innovation, not just compliance. They want efficiency savings as well as timely project delivery. They want providers to share risk, not wash their hands of liabilities. They want to get ahead of the curve not get caught out by new regulations” stated Rodolphe d’Arjuzon, Verdantix Global Head of Research. “Environmental services suppliers in the US market should offer customers more hard data on projects, create innovative engagement models with shared project risk and figure out how to implement a transformational life cycle approach to environmental resource management.”

On February 14, 2012 a Verdantix report found thatAccenture, Deloitte, IBM and Logica lead the global market for sustainable technology services. The in-depth sector benchmark finds that the 17 largest global IT services providers accelerated their investments in energy, environment and sustainability service lines during 2011( ....
“Twelve months ago IT services firms were preparing to launch new advisory and implementation service lines in response to their customers’ energy and environment strategies” said Phil Sayer, Verdantix Principal Analyst and author of the report. “This innovation agenda has exploded onto the technology services market in 2012 with a whole raft of new offerings such as sustainability performance management from Accenture, smart energy services from Capgemini and climate change IT systems from CSC. Software providers like IHS support growth for IT services firms as they help strategic alliance partners such as Deloitte to implement enterprise-scale EH&S platforms.”

The Verdantix report, Green Quadrant Sustainable Technology Services (Global) 2012 is based on in-depth analysis of 17 global IT services firms across 52 criteria. The study also assessed customer perceptions through interviews with a panel of buyers representing 10 industries and collective spend of $331 billion.
On January 31, 2012 Verdantix said UK Sustainable Business Spending Will Grow Twenty Times Faster Than UK GDP In 2012 Reaching £6.8 Billion In 2015 (
Spending by large UK firms on energy, environment and sustainability initiatives will grow at an average of 16% a year between 2012 and 2015, according to a new market forecast from independent analyst firm Verdantix. The growth in sustainable business spending in 2012 will be 12% which is twenty times faster than the forecasted growth of the UK economy at 0.6%. The study finds that spending by 421 firms in the UK with revenues greater than £750m will grow from £4.3 billion in 2012 to £6.8 billion in 2015. With current GDP assumptions, annual growth rates will accelerate from 15% in 2013 to 17% in both 2014 and 2015.
“Despite the sluggish economy, spending by large firms in the UK on energy, environment and sustainability initiatives is set to increase by 12% in 2012. By contrast the UK economy is only expected to grow by a paltry 0.6% in 2012” commented Susan Clarke, Verdantix Analyst and author of the report. “The UK’s sustainable business market is continuing to grow at a healthy rate because firms have aligned sustainability strategies with operational efficiency. Energy cost savings and more efficient use of natural resources now underpin sustainability investments – not philanthropic commitments to fight climate change.”

The Verdantix study, UK Sustainable Business Spending 2010-15, finds that three value chains account for three-quarters of the entire UK market. In 2012, retail and consumer brands will account for 34% of total spend representing £1.5 billion. The emissions intensive sectors – oil and gas, transport and utilities -- will spend £1.1 billion on sustainable business initiatives representing 25% of the 2012 market. Technology, telecoms and high-tech engineering firms will represent a further 18% of the market in 2012, reaching £792 million. Over the 2010 to 2015 period, compound annual growth rates will vary between 17% for sectors at the top end like automotive, telecoms and utilities, and 9% at the bottom end in the chemicals and pharmaceuticals sectors.

Industry growth rates diverge over the 2010-15 period because each industry is impacted differently by four market drivers. 1) The relative maturity of organizational structures designed to deliver sustainability strategies, for instance, the presence of a Chief Sustainability Officer. 2) The scope to generate revenues in markets for on-site renewable energy, energy efficiency, green building materials, environmental product stewardship and sustainable waste management. 3) The impact on business operations of policies for energy efficiency, renewable energy and carbon management. 4) The potential to differentiate on sustainability, which is significant in sectors like grocery retail, data centre services and consumer products but not in industrial sectors.

In the context of the 16% compound annual growth rate, some initiatives will experience significant growth and others will barely keep pace with inflation. Fast growing areas of spend between 2010 and 2015 are smart meters (23%), electric vehicles (22%), on-site renewable energy (22%), product stewardship (21%) and sustainable solution marketing (21%). Initiatives which will experience slower growth rates are: spending on social responsibility (5%), employee engagement (5%), environment, health and safety (6%), regulatory affairs and lobbying (6%). Taken as a whole, strategic energy management will be the largest area of spend in sustainable business budgets.
Press Release dated July 5, May 21, February 14 and January 31, 2012

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