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Enel Buys EnerNOC in $250m Deal - But Does Energy Management Offer Utilities A Brighter Future?

On June 22, 2017, Enel Group announced it will acquire Boston-headquartered EnerNOC, a provider of demand response services and energy management software for $250 million. Enel will leverage the acquisition to boost its commercial and industrial energy management capabilities under its E-Solutions business unit and target cross-selling opportunities across the new client base.

The EnerNOC deal follows an established trend of large power utilities buying up energy management specialists – to respond to pressure on the traditional business model (including regulatory pressure, the growth of decentralized energy and disruptive new entrants). For example, ENGIE acquired Ecova, Green Charge Networks and C3 Resources, Centrica bought Panoramic Power and ENER-G, Duke Energy snapped up Phoenix Energy Technologies and E.ON acquired energy services firm Matrix. Just last month Centrica confirmed that it will continue to invest in home services and energy solutions, as it sees zero growth potential from traditional energy supply and power generation into the middle of the next decade.

So as power utilities continue to invest to diversify from traditional business models, does energy management offer a more promising future? One major challenge for the energy management market is that flat or mildly rising energy prices in certain regions are not creating enough urgency for many large firms to invest. Our survey data shows that over half of firms expect flat energy management budgets in 2017. Indeed that’s one of the reasons utilities are getting good prices for these companies.

Given market headwinds, the trend has been for suppliers to expand offerings from pure energy management into facilities optimization. This means that propositions can optimize buildings across a broader scope, and tap larger budgets including maintenance and operations. Witness Veolia acquiring Enovity, a provider of integrated energy management and facilities management services.

As power utilities continue on their acquisition trails, they should also review potential targets that have capabilities in facilities optimization, such as BuildingIQ, ENTOUCH, Envizi, Opinum and Switch Automation, to avoid being left in another challenging market.