BUILDING ENERGY SIMULATION SOFTWARE MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)

The global building energy simulation software market size was valued at US$ 4.80 billion in 2023 and is expected to reach US$ 10.7 billion by 2030, growing at a compound annual growth rate (CAGR) of 12.1% from 2023 to 2030.

Building energy simulation software helps in predicting and analyzing energy consumption of a building during its early design stage. It is used by architects, engineers, and contractors to design energy-efficient buildings as per mandated regulations and green building standards. The growth of the market is driven by government regulations for energy-efficient buildings and the increasing adoption of green buildings globally.

The building energy simulation software market is segmented based on component, application, end-use industry, deployment model, organization size, and region. By component, the software segment accounted for the largest share of the building energy simulation software market in 2022. Software helps in creating a virtual model of a building and simulates aspects like lighting, heating, ventilation, and air conditioning (HVAC), and system controls, among others to analyze the energy performance. The increasing need to comply with stringent regulations is driving the demand for building energy simulation software.

Building Energy Simulation Software Market Regional Insights

• North America is expected to be the largest market for building energy simulation software during the forecast period, accounting for over 35% of the market share in 2022. The growth of the market in North America is attributed to supportive government regulations such as updated ASHRAE standards in the U.S. and increasing green building construction.
• Europe is expected to be the second-largest market for building energy simulation software, accounting for over 25% of the market share in 2022. The growth of the market in Europe is attributed to high adoption of sustainable building practices and standards such as EU Energy Performance of Buildings Directive.
• Asia Pacific is expected to be the fastest-growing market for building energy simulation software, growing at a CAGR of over 20% during the forecast period. The growth of the market in Asia Pacific is attributed to rapid urbanization and increasing construction of commercial buildings equipped with advanced technologies.

Figure 1. Global Building Energy Simulation Software Market Share (%), by Region, 2022

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Building Energy Simulation Software Market Analyst’s Viewpoint:

The global building energy simulation software market is expected to witness significant growth over the forecast period driven by the increasing demand for energy-efficient buildings worldwide. Stringent government policies and building codes pertaining to energy efficiency are also pushing more architects, engineers, and building owners to adopt energy modeling tools. The rising environmental awareness and need to reduce carbon footprint will further propel the demand for building simulation software. However, the growth may be restricted by the high costs associated with such specialized software. Complexities involved in modeling large and complex building designs can also hamper the widespread adoption of these tools. Lack of awareness in developing regions poses a challenge as well. North America currently dominates the market but the Asia Pacific region is emerging as a high growth area due to the rapid infrastructure development and urbanization in countries like China and India. Government initiatives to promote green buildings offer lucrative opportunities for vendors. Cloud-based Software as a Service (SaaS) offerings enabling easy access are gaining popularity and can expand the customer base. Integrations with Building information modeling (BIM) and IoT platforms will enhance the functionalities and make energy modeling more effective. Collaborations with engineering consultants and adoption of AI/ML technologies can further augment the revenue streams for key players in the market.

Building Energy Simulation Software Market Drivers:

• Government regulations and policies for energy efficiency: Governments across the globe are implementing stringent policies and regulations to mandate energy-efficient infrastructure. For instance, the EU Energy Performance of Buildings Directive requires all new constructions to meet renewable energy requirements. The U.S. also has stringent building codes such as ASHRAE 90.1 for commercial buildings. Such regulations are driving the demand for building energy simulation software to ensure compliance. Architects, engineers, and contractors are increasingly adopting building simulation solutions to model energy consumption and optimize the design. The software helps in making informed decisions to develop sustainable buildings.
• Growing adoption of green buildings: The rising awareness about environmental impact has led to a significant increase in the construction of green buildings over the past decade. Green buildings aim to reduce energy and water consumption through efficient design, materials, and renewable technologies. For instance, the global green building materials market is expected to reach US$ 364.6 billion by 2028 from US$ 254.2 billion in 2021, growing at a CAGR of 5.9%. Building energy simulation software plays a crucial role in designing green buildings that meet stringent certification criteria like LEED and BREEAM. The software enables construction firms to create sustainable infrastructure with minimal environmental impact. For instance, in May 2023, Autodesk, Inc. is a leading software company specializing in providing solutions for design, engineering, and entertainment industries introduced the inaugural suite of features for Autodesk Forma, a specialized industry cloud designed to integrate processes among the professionals who design, construct, and manage built environments.
• Need to reduce operational costs: With energy costs rising significantly, commercial building owners and residential builders are looking for ways to curb operational expenditures. Building energy simulation provides a cost-effective method to identify design issues and test potential energy-saving alternatives in the beginning stages of construction. The software generates data on the energy performance of various materials, systems, and equipment to enable cost savings. According to the US EIA, the use of energy modeling tools can help in reducing energy consumption by 25% in residential buildings.
• Advancements in BIM and simulation technologies: Building information modeling (BIM) and simulation technologies are undergoing continuous advancements with the integration of AI, IoT, and cloud-based solutions. BIM coupled with building performance simulation enables architects and engineers to create digital twins and perform rapid computations to achieve the most optimized design. Advanced solutions leverage predictive analytics to provide actionable insights for efficiency improvements. The integration of simulation capabilities with tools like Revit and ArchiCAD provides a streamlined workflow. For Instance, in November 2023, Autodesk, Inc revealed the launch of Autodesk AI, an innovative technology crafted to enhance creativity, provide solutions to complex issues, and reduce unproductive tasks within various sectors focused on designing and creating surroundings.

Building Energy Simulation Software Market Opportunities:

• Emergence of net zero energy buildings: Net zero energy buildings are gaining significant traction in recent years as they effectively reduce carbon footprint by producing as much renewable energy as they consume. According to New Buildings Institute, the global net zero buildings market is expected to reach over US$ 1 trillion by 2030. Building energy simulation software plays a crucial role in designing highly efficient net zero energy infrastructure. The growth in net zero buildings construction presents major opportunities for market players to provide advanced simulation solutions.
• Growing smart city projects: With rapidly growing urbanization, governments across the globe are initiating smart city projects focused on sustainable infrastructure. These projects utilize ICT, IoT, renewable energy, and energy-efficient technologies in buildings. According to Frost & Sullivan is a global consulting firm that offers research, analysis, and consultancy services across various industries, the global smart city market is expected to reach USD 2 trillion by 2025. Smart city development will drive the adoption of building energy simulation software to plan low-carbon, eco-friendly buildings to reduce the environmental impact. For instance, in October 2021, Autodesk Inc, debuted a suite of cloud-based solutions aimed at fostering sustainable and resilient results for communities, buildings, and infrastructure projects.
• Cloud-based software as a service: The SaaS model for building energy simulation software is gaining swift momentum over the past few years owing to its flexibility, scalability, and affordability. Cloud-based solutions do not require any upfront installation or investment in IT infrastructure, thereby reducing the costs. They also offer anytime access to advanced simulation capabilities. SaaS provides an opportunity for software vendors to attract small and medium construction firms.
• Growing construction industry: The global construction market has witnessed steady growth driven by large-scale residential and infrastructure projects in developing nations. According to a Global Market Model, the construction industry is expected to reach US$ 15.2 trillion worldwide by 2030. With significant growth in construction activities, there will be a high demand for building energy simulation software to comply with energy codes and construct sustainable buildings.

Building Energy Simulation Software Market Trends:

• Integration with AR and VR: Augmented reality (AR) and virtual reality 9VR) are being increasingly integrated with building energy simulation software solutions. AR allows architects and designers to visualize a simulated model in the actual site environment, enabling real-time collaboration and decision making. VR enables immersive walkthroughs of digital prototypes. For instance, Autodesk now offers Revit Live that leverages VR technology to create interactive 3D views. The integration of such technologies greatly enhances the design process.
• AI and generative design: Artificial intelligence and generative design are disrupting building energy simulation software offerings. Vendors are integrating AI algorithms into simulation tools for intuitive modeling, improved interoperability, and rapid analysis of massive design permutations. Autodesk and Siemens is a multinational conglomerate known for its diverse range of products and services, particularly in the fields of electrification, automation, and digitalization now provide generative design capabilities that leverage AI to automatically generate and test design options to identify the most energy-efficient alternative. For Instance, in November 2021, PassiveLogic is an innovative company specializing in autonomous building systems unveiled a generative AI platform for self-managing buildings.
• Connectivity with IoT sensors: Building energy simulation software integrated with IoT sensors enables real-time data collection and simulation of actual building performance during the operation phase. IoT allows remote monitoring and control to continuously maintain efficiency. For instance, Schneider Electric provides EcoStruxure solution that leverages IoT-enabled building simulation for data-driven decision making and predictive maintenance. The fusion of simulation and IoT unlocks major opportunities for energy savings.
• Cloud computing for performance optimization: Cloud computing enables building energy simulation software to utilize scalable computing power for running multiple iterative, complex simulations in parallel. This provides rapid computational fluid dynamics capabilities for modeling intricate systems like natural ventilation and renewable systems. Cloud offers the benefit of accelerated optimization of building performance for efficiency. Vendors like Autodesk Inc. now offer cloud-based simulation solutions.

Building Energy Simulation Software Market Restraints:

• High deployment costs: While building energy simulation software provides major benefits, the costs of implementation remains high, especially for small firms. The expenses include costs of software licenses, training staff, integrating with existing workflows, and hardware upgrades which discourage adoption. Many vendors provide only on-premise deployment, leading to substantial IT infrastructure costs. Lack of skilled expertise further inflates costs of modeling and analysis. Counterbalancing these challenges involves several approaches. Some software providers are moving toward more accessible pricing models, such as subscription-based or cloud-based offerings, reducing upfront costs. Additionally, vendors are focusing on user-friendly interfaces and simplified training programs to lower the skill barrier, making the software more accessible to a broader range of users.
• Interoperability issues: Integrating building energy simulation software with commonly used BIM and CAD modeling tools involves significant interoperability challenges. Incompatibility of formats like gbXML and IFC causes data loss and rework. This hinders the optimal utilization of simulation capabilities during designing. Developing open standards for seamless integration remains a major restraint for the market growth. Counterbalancing these challenges involves concerted efforts to address interoperability concerns. Development of open standards and protocols for data exchange, such as industry-wide adoption of standardized formats like gbXML and IFC, can significantly mitigate interoperability issues. These standards aim to establish a common language for software systems, facilitating seamless communication and data transfer between different platforms.
• Accuracy of simulations: Although advanced simulation programs are available, uncertainties remain regarding the accuracy of results. Small discrepancies in input parameters can vastly impact energy use estimations. Factors like real-time weather data integration and predicting occupant behavior also influence precision. Limitations in replicating real-world scenarios restrain reliability, preventing complete user confidence. Efforts to counterbalance the challenges in building energy simulation software involves a multifaceted approach aimed at elevating the accuracy and reliability of simulation results. Continuous refinement of simulation algorithms and models is a key aspect, striving to encompass a broader spectrum of variables and intricate interactions within building systems.

Recent Developments

New product launches

• In May 2023, Autodesk Inc. is a renowned software company recognized for its expertise in providing solutions for design, engineering, and entertainment industries launched Forma, a cloud-based solution for a revolutionary building design
• In November 2022, During COP27, Bentley Systems, known for infrastructure engineering software, introduced improved methods for computing embodied carbon in the Bentley iTwin platform. This platform supports their user-friendly digital twin infrastructure solutions, highlighting an emphasis on workflows for carbon calculation.

Acquisition and partnerships

• In October 2023, Autodesk Inc. complete the acquisition of FlexSim factory simulation is a robust software platform designed for creating, simulating, and visualizing models of manufacturing and logistics systems
• In December 2021, Capgemini is a global leader in consulting, technology services, and digital transformation and Autodesk Inc. is a prominent software company specializing in providing solutions for design, engineering, and entertainment industries expanded their partnership to provide an integrated building information modeling platform and digital transformation services
• In September 2022, DesignBuilder is a comprehensive software platform used in building performance analysis and simulation collaborated with The Bartlett to Pioneer Advances in building performance simulation

Figure 2. Global Building Energy Simulation Software Market Share (%), by Deployment Model, 2022

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Top Companies in the Building Energy Simulation Software Market

• Autodesk, Inc.
• IES (Integrated Environmental Solutions)
• Bentley Systems
• Dassault Systèmes
• EnergyPlus
• CYPE Software
• DesignBuilder Software
• IESVE (IES Virtual Environment)
• Carrier
• eQUEST
• Trane Technologies
• IES TaP
• IES SCAN
• Trimble
• EnergySoft

Definition:

Building energy simulation software refers to an advanced computerized program that offers dynamic and comprehensive analysis of energy consumption of all systems and equipment of a building such as lighting, HVAC, system controls, renewables, etc. It creates a virtual model of the building and simulates various aspects to analyze annual, monthly, and hourly energy performance data.