INDUSTRIAL ENERGY EFFICIENCY MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)

The Industrial Energy Efficiency Market size is expected to reach US$ 41.21 billion by 2030, from US$ 23.13 billion in 2023, at a CAGR of 8.6% during the forecast period.

Industrial energy efficiency refers to the use of technologies, systems, and practices to reduce the amount of energy required for industrial processes and operations. Adopting energy efficiency measures helps industries optimize energy consumption, reduce costs, and lower greenhouse gas emissions.

The key offerings in this market include efficient equipment such as motors, pumps, compressors, and heating and cooling systems. It also includes automation and control systems like distributed control systems, building management systems, and energy management software. Services such as system optimization, maintenance, and training are also part of industrial energy efficiency solutions.

Industrial Energy Efficiency Market Regional Insights

• North America is the largest market for industrial energy efficiency, accounting for a share of 35.4% in 2023. The growth of the market in North America is driven by the stringent government regulations on energy efficiency, the increasing adoption of smart grid technologies, and the growing demand for energy-efficient products and services from industrial companies.
• Europe is the second-largest market for industrial energy efficiency, accounting for a share of 28.2% in 2023. The growth of the market in Europe is driven by the increasing focus on renewable energy sources, the rising awareness about the benefits of energy efficiency, and the growing demand for energy-efficient products and services from industrial companies.
• Asia Pacific is the fastest-growing market for industrial energy efficiency, accounting for a share of 24.4% in 2023. The growth of the market in Asia Pacific is driven by the rapid industrialization in the region, the increasing demand for energy-efficient products and services from industrial companies, and the supportive government policies.

Figure 1. Global Industrial Energy Efficiency Market Share (%), By Region, 2023

Industrial Energy Efficiency Market Drivers

• Supportive Government Policies and Regulations: Various governments across the globe are introducing policies, incentives, and regulations to drive industrial energy efficiency. For instance, the European Union has set energy efficiency targets under the Energy Efficiency Directive. The directive mandates energy audits for large companies and aims to cut energy consumption by 32.5% by 2030. Similarly, under the U.S. Energy Policy Act 2005, tax incentives are offered for energy efficiency investments. Such policies encourage industries to adopt energy-efficient equipment, systems, and processes, thereby driving the industrial energy efficiency market.
• Rising Energy Prices: Energy prices have been volatile and on an upward trajectory over the past decade. According to the U.S. Energy Information Administration (EIA), the industrial electricity prices rose from 7.06 cents/kWh in 2010 to 7.43 cents/kWh in 2020. Similarly, industrial natural gas prices spiked from $5.1/million British thermal units in 2010 to $7.3/million British thermal units in 2014. The rising energy prices strain profit margins for industries. This is compelling industries to employ energy efficiency measures to optimize energy consumption and costs.
• Need to Reduce Carbon Footprint: Industries are targeting net-zero emissions and reducing their carbon footprint through energy efficiency amid increasing environmental concerns. The International Energy Agency estimates industry accounted for 35% of global final energy consumption and 40% of energy-related CO2 emissions in 2019. By adopting energy-efficient equipment and systems, industries can significantly reduce emissions and align themselves with their sustainability goals.
• Technology Advancements: Advances in technology are enabling greater energy optimization in industrial operations. Technologies like artificial intelligence, machine learning, IoT sensors, and cloud computing are helping analyze energy usage patterns and improve efficiency. For instance, General Electric’s intelligent PLC software analyzes data to identify operational inefficiency. Siemens offers cloud-based monitoring platforms to track energy performance. Such technological innovations propel the adoption of industrial energy efficiency solutions.

Industrial Energy Efficiency Market Opportunities

• Integration with Renewable Energy Sources: There are significant opportunities for integrating energy efficiency initiatives with renewable energy adoption in industries. Renewable sources like solar, wind, and geothermal can be leveraged along with upgrades to equipment, automation and control systems to minimize carbon footprint and energy costs. For example, onsite installation of solar panels coupled with intelligent energy management systems can optimize self-consumption of renewable energy.
• Retrofitting Existing Infrastructure: A major opportunity lies in retrofitting existing industrial infrastructure with energy-efficient technologies as completely replacing equipment involves huge investments. Retrofitting with products like energy-efficient motors, variable speed drives, lighting systems, insulation, and heat recovery systems can improve efficiency at lower costs. According to the IEA, efficiency retrofits could cost-effectively reduce global industrial energy use by 10%.
• Focus on SMEs: While large energy-intensive industries are early adopters, small and medium enterprises (SMEs) also offer opportunities. SMEs account for a major share of industrial energy consumption in countries like India and China. Governments are introducing financial incentives and subsidies to encourage SMEs to employ energy efficiency solutions tailored to their needs. Industry leaders are also partnering with SMEs to provide knowledge and resources to optimize their energy usage.
• Emerging Economies: Industrialization and infrastructure development in emerging economies offer strong potential for energy efficiency uptake. Countries like China, India, Indonesia, Brazil, and South Africa, with rapidly growing manufacturing and heavy industries, provide lucrative opportunities. Government initiatives like India’s Perform, Achieve and Trade Scheme, which allows industries to trade energy credits, further boosts energy efficiency investments in these markets.

Industrial Energy Efficiency Market Trends

• Internet of Things (IoT) and Big Data: The Industrial Internet of Things (IIoT) is driving large-scale adoption of connected sensors, meters, equipment, and other devices that generate data on energy usage and performance. Big data analytics enables deriving actionable insights from the massive amount of data collected. This facilitates identifying inefficiencies and achieving automation in real-time to optimize energy utilization. According to Allied Market Research, the global IIoT market is poised to grow at a CAGR of 22.3% from 2021 to 2030.
• Cloud-Based Software: Cloud-based software solutions are emerging as an important tool to manage energy efficiency across multiple facilities of an industry. They provide a centralized platform to obtain transparent energy usage data, track savings, identify optimization opportunities, and control equipment remotely. According to MarketsandMarkets, the industrial energy management system market is projected to grow from USD 18.7 billion in 2020 to USD 36.6 billion by 2025 at a CAGR of 14.3%.
• Artificial Intelligence: Artificial intelligence and machine learning have become indispensable for unlocking complex insights from energy data that humans cannot discern. AI algorithms help in predictive maintenance of equipment, dynamic optimization of systems, modeling energy consumption patterns, and simulation for decision making to enhance energy efficiency. Mordor Intelligence estimates the AI in energy market could grow at a CAGR of 22.82% from 2022 to 2027.
• Blockchain Technology: Blockchain is an emerging technology being explored for facilitating transparent and tamper-proof monitoring of industrial energy consumption while protecting sensitive data. It enables reliable tracking of energy savings and trading of Energy Efficiency Certificates. Blockchain also allows peer-to-peer energy trading of renewable energy between industries. According to Allied Market Research, the global blockchain energy market is forecast to grow at a 65.4% CAGR from 2021 to 2030.

Industrial Energy Efficiency Market Restraints

• High Upfront Costs: The high upfront costs for installing new energy-efficient equipment and systems deter many industries, especially SMEs, from adoption. Payback periods tend to be longer compared to other investments. However, governments are trying to address this through financial incentives. Companies also increasingly adopt lifecycle cost analysis to account for long-term cost savings from efficiency investments.
• Lack of Expertise: There is a shortage of skilled expertise to optimize complex integrated systems for energy efficiency in industries. It requires knowledge in disciplines like power engineering, control systems, data analytics, IoT, and information technology to be leveraged cohesively. Industries find it challenging to assemble teams with such diverse expertise. But they are trying to address this through partnerships and hiring specialists.
• Legacy Infrastructure: Existing old and disjointed infrastructure makes it difficult to retrofit and integrate new technologies for energy optimization in industries. Replacing legacy equipment involves substantial downtime and affects production. Lack of interoperability and cybersecurity risks of Industrial Control Systems also hamper integration. However, industries are modernizing infrastructure in phases to facilitate energy efficiency.

Recent Developments

New product launches

• In September 2022, Schneider Electric launched EcoStruxure Power Automation System, a suite of connected software and systems for digital transformation of power distribution infrastructure. It helps improve safety, reliability, efficiency, and sustainability.
• In November 2021, Eaton announced the launch of new medium voltage switchgear technology, Xiria Ring Main Unit (RMU), to make electric power distribution safer and more reliable. It is an SF6-free RMU aimed at sustainability.
• In May 2022, Siemens opened a new showcase facility for efficient electrification and automation technologies that can be customized for the mining industry. This provides an immersive demonstration of Siemens technologies tailored for mine optimization.

Acquisition and partnerships

• In January 2022, Danfoss acquired Roxar, a leading provider of software systems for reservoir management and production optimization, from Emerson. This strengthened its position in the oil and gas industry.
• In June 2021, Enel X partnered with the Italian energy services company Renovit to jointly offer integrated energy efficiency solutions for industries using Enel X’s technologies.
• In April 2022, Honeywell partnered with Shell to provide predictive maintenance and asset monitoring solutions to help extend equipment life and improve performance at Shell's Bukom manufacturing site.

Figure 2. Global Industrial Energy Efficiency Market Share (%), by Systems, 2023

Top companies in Industrial Energy Efficiency Market

• Siemens
• General Electric
• ABB
• Johnson Controls
• Schneider Electric
• Honeywell
• Eaton Corporation
• Rockwell Automation
• Emerson Electric
• Mitsubishi Electric
• Yokogawa Electric
• Veolia Environnement
• SGS
• Enel X
• Wärtsilä
• Danfoss
• Hitachi
• Legrand
• Ingersoll Rand
• Schneider Electric

*Definition: The Industrial Energy Efficiency market refers to the technologies, equipment, systems, software, and services implemented across various industry verticals to optimize energy utilization. It aims to reduce energy consumption in industrial processes and infrastructure by using energy-efficient equipment, installing automation and control systems, changing processes, and adopting software to analyze and control energy flows. The adoption of energy efficiency measures brings energy and cost savings, improved productivity, reduced emissions, and long-term environmental and economic sustainability for industries.

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