Costs Rising for Energy-Slashing Strategies

09/01/2014 |

Increased demand poised to drive up prices

Thinking about proposing an energy efficiency project?

Now may be the best time – prices are poised to rise on several key technologies, according to a report by IBISWorld, an industry market research provider. The report identified four top savings strategies that are likely to see changes in demand and cost in the next three years.

Energy management systems: The average commercial building wastes roughly 30% of the energy it consumes, according to the report, mainly due to inefficient HVAC and lighting. This waste, coupled with rising utility prices, is driving up demand for energy management systems.

Improvements in wireless technology are reducing the amount of wiring needed and helping temper installation costs. IBISWorld predicts costs will rise at an annualized rate of just 1.5% between now and 2017 and says that buyers who need multiple systems can generally bundle purchases to receive discounts or favorable maintenance contracts.

Window and door installation: Recent expansion in construction and renovation activity is contributing to a larger demand, which is giving suppliers greater pricing leverage and driving up costs, according to the report. Installation services for windows and doors are forecasted to rise at an annualized rate of 2%, IBISWorld says.

HVAC services: Because HVAC systems are the second-largest source of energy consumption in commercial buildings, installation and maintenance services for HVAC are expected to continue rising in both demand and price.

Costs for HVAC system construction are likely to increase at a faster pace with an annualized rate of 7.2%, mainly thanks to greater investment in buildings. As a result of this, installation and maintenance demands will also grow, with their costs following suit – an annualized rate of 4.2% over the three-year period is predicted. To help lock in lower prices, the report recommends long-term contracts with suppliers.

Solar panel installation: Only about 1% of U.S. energy comes from solar installations, but this figure is an increase from just three years ago thanks in part to government initiatives and incentives. SunShot Initiative, a national collaborative backed by the DOE, hopes to increase that share to 14% by 2030.

Demand is expected to continue rising.However, IBISWorld predicts that solar panel installation prices will actually fall during the three-year period (at an annualized rate of 3.7%), mainly due to the incentives. The costs of the panels themselves have dropped more than 60% since 2010.

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