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What’s Life Going To Be Like For Current After GE?

US conglomerate GE is not having a good year. In 2017 alone, its public shares have dropped 37% and its long-standing CEO Jeffrey Immelt was forced to resign. His replacement, John Flannery recently laid out a strategy to try and right the ship which includes the sale of its energy efficiency unit Current within the next two years.

Current combines several services to help clients become more energy efficient. The business unit provides a lighting management solution through the integration of networked sensors, software and GE’s line of LED lights. Clients such as banking giants JPMorgan Chase and Santander have signed on for the potential to reduce lighting bills across their bank branches (by up to 70% in some cases). Current also builds and manages on-site solar installations for customers such as Home Depot.

While Current is a tiny part of the $124bn turnover of GE, it is interesting to ask the question: is the potential sale of Current by GE a pronouncement on the state of GE’s current troubles or market troubles for energy efficiency in general?

Verdantix research has identified energy efficient lighting upgrades and lighting control upgrades as a consistent investment priority for real estate and energy management firms. In 2016, 34% of respondents to our global survey of 280 real estate and energy directors stated they were investing in energy efficient lighting. This is an eight-percentage point increase from the 28% of respondents stating the same in 2015. Sales growth of energy efficient lighting is being driven by factors such as the rise of facility optimization and the falling price of lighting products. Over the past three years, LED bulb prices have dropped from approximately $25 a bulb to the low single digits now. LED’s have pretty much become commoditized.

Additionally, the managed services market for energy efficiency, while growing is not turbo charged with only 13% of global real estate directors stating an expectation to contract for these services in the next year.

Let’s not get into the capital intensiveness and challenges of solar projects – witness the 2017 bankruptcy filing of US solar project developer Sungevity.

So, yes Current is in a difficult market, but its not impossible as competitors such as Cree, Lunera and Wipro Lighting continue to innovate and push ahead with products and partnerships aimed at tapping the growing smart workplace market. Going forward, Current should pay attention to how these companies are aligning their solutions with the broader, and potentially more lucrative, trend of facility optimization management. Focusing solely on energy management is a failing proposition as issues of maintenance cost reduction and improved space utilization take prominence on the corporate agenda.

To gain more insights into the changing corporate agenda and to hear the findings from the Verdantix 2017 global survey, sign up for the upcoming webinar: 2018 Benchmark For Real Estate, Energy And Facilities Budgets & Technology Preferences.