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May 3, 2010: Green Buildings Expected to Grow to a $277 Billion Market

May 3, 2010
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BOSTON - Interest in green buildings has sparked a growing industry, according to a new report from Lux Research. The market for energy-saving green buildings is forecast to expand from $144 billion today to $277 billion in 2020, representing a 6.1 percent compound annual growth rate (CAGR).

Titled “Diamonds in the Rough: Uncovering Opportunities in the $277 Billion Green Buildings Market,” the report is said to provide a clearer picture of current and emerging technologies, including those that offer the biggest growth opportunities.

“The developed world’s 728 billion square feet of residential, commercial, and government floor space account for nearly 40 percent of its primary energy use, and consume 72 percent of its electricity,” said Michael LoCascio, a senior analyst at Lux Research, and the report’s lead author. “But while there’s increasing interest in cost-saving green building technologies, the market remains poorly defined.”

The new report analyzes the revenue and growth potential of the market’s enabling technologies. It defines “green building technologies” as any service, equipment, or material that improves the energy efficiency or reduces net material consumption of a building over and above that of the standard used at the time of original construction.

The report focuses on energy-saving green building technologies, and examines the prospects for more than 30 “established green” and “emerging green” technologies, based on primary interviews with engineers, contractors, architects, and technology suppliers, as well as secondary research of technology development and pricing trends. The report’s key conclusions include:

• The energy-saving equipment category will gear up to reach $146 billion in 2015. The market’s largest segment, green building equipment, comprises HVAC, water heating, and lighting systems, as well as energy-generation technologies such as rooftop solar, building-integrated photovoltaics (PV), and combined heat and power systems. This segment represented $67 billion in 2009, but new growth in LEDs, smart lighting, and advanced heat technologies will help sustain a 7.3 percent CAGR through 2015.

• The services segment will deliver the most robust growth. The green services category encompasses energy service companies (ESCOs), demand response, building energy management, and smart meters. In 2009, it represented only 11 percent of the green building market with $16 billion in revenues. But strong expansion of emerging technologies, like demand response, will expand the segment’s revenues to $55 billion in 2020, reflecting a 12 percent CAGR.

• Materials are the slowest growing segment, with a few bright spots. Energy-saving green building materials, such as insulation, windows, and structural materials amounted to $62 billion in 2009; the segment will reach $75 billion in 2015, a relatively slight 2 percent CAGR. Emerging technologies to watch, however, include electrochromic, thermochromic, and thermoreflective windows, which control how much sunlight windows admit.

“The adoption cycle for green building technologies is comparatively long, and growth will rely in part on subsidies,” said LoCascio. “The biggest driving factor, however, is straight-up economics. Technologies that can provide a payback in three years are more likely to be adopted by commercial building owners. Those providing payback in five years, however, are still attractive for government buildings.”

Publication date: 05/03/2010

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