AM29034

AMA RESEARCH Market Report : UK Building Energy Management : April 2004

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Introduction and Overview

AMA Research have published the second edition of the 'Building Management Systems Market - UK 2004'. Incorporating original input and primary research, the report represents a unique view of this complex, innovative market and offers excellent value for money.

Positive levels of growth were experienced in this substantial market through much of the 1990's but this has now moderated, reflecting a combination of factors, although future prospects are viewed as optimistic reflecting an anticipated improvement in non-domestic construction in the medium term, together with more stringent environmental and legislative requirements.

Key areas covered in the report:-

A DETAILED ASSESSMENT OF THIS £350 MILLION MARKET - with a review of recent trends, interpretation of current developments and future trends alongside a long term forecast.

ANALYSIS BY PRODUCT GROUP

ANALYSIS OF SUPPLY STRUCTURE - key suppliers, distribution channels, etc.

REVIEW OF END-USE APPLICATIONS - commercial, leisure, health care, education, retail, industrial, infrastructure, etc.

The report reviews developments within the industry, with emphasis on both qualitative and quantitative market assessment. Recent trends, key influencing factors and forecasts of future developments are assessed.

The report is part of a series published by AMA on the UK electrical industry, including lighting, electricity generating sets, uninterruptible power supply systems, electrical wholesalers, electrical accessories, panel builders, electrical contractors, and fire and security.

Of particular interest:-

Review of key influences - construction, manufacturing, legislative, PFI, energy management, facilities management, availability of UPS trends in CCTV, security protection and detection, etc.

Analysis of activity levels in major end use applications.

Review of BMS functions.

Niche sector growth - security system upgrades, solar heating etc.

Future prospects.

The report content includes:-

BUILDING MANAGEMENT SYSTEMS MARKET

Market size by value for Building Management Systems - from 1996-2003, trends and market influences, Forecasts to 2007 and factors influencing future prospects.

Sales of Advanced Control Products from 1996-2000, outlook to 2007.

Market structure - role played by controls manufacturers, systems integrators, M & E contractors, panel builders etc, changing influences.

The impact of levels of construction activity, energy reduction strategies, legislative requirements growth of Facilities Management contracts and niche sector expansion - e.g. security protection and detection, etc.

Overall market assessment of the complex trends in the BMS and advanced control markets.

PRODUCT STRUCTURE AND TRENDS

Structure of Building Management Systems, trend towards integration of a wider range of building services.

Functional structure of BMS systems.

Mix of BMS costs - Control Products, MCC, Cabling/Busbars, Design/Installation.

Key issues and product trends - utilisation of existing IT infrastructure, environmental and legislative issues.

SUPPLY STRUCTURE

Review of major manufacturers and suppliers - Controls Manufacturers, Systems Integrators, M & E Contractors.

Distribution of advanced control products - direct to end users, systems integrators, OEM applications etc.

End-use application areas - mix of sales into commercial, industrial and public sectors, significant end users, potential growth areas.

BUILDING SERVICES PRODUCT TRENDS

Growth of Building Services Product Installations, greater complexity within buildings, more comprehensive control requirements.

Market size and trends, key product trends influencing BMS market, major manufacturers for each of the following product sectors:

Non-Domestic Space Heating

Lighting

Ventilation

Security

Air Conditioning

Fire Systems

FUTURE PROSPECTS

Future developments, changing industry structure, implications for suppliers.

Economic influences, growth prospects etc.

Executive Summary

The overall market for building management systems is relatively stable with an estimated value of £352m in 2003 at manufacturers selling prices. A substantial proportion of the cost of a complete system is accounted for by design, installation and commissioning costs, with the value of the advanced control product market valued at £113m in the same year.

Although the market experienced positive conditions during the late 1990's, recent performance has been more subdued reflecting relatively stable conditions in the overall construction sector and low levels of penetration in the 'small' commercial building sector. In addition, the concept of energy efficiency has not tended to motivate the market to the extent that had at first seemed possible, although in the long term it is envisaged that legislation will become increasingly more detailed, complex, and 'tougher'. This is likely to have the effect of providing additional motivation for BMS in the long term.

The outlook for the market is relatively positive in the medium to long term influenced by a number of factors including:

Variable levels of construction investment with health, education and infrastructure viewed as more positive in the short to medium term in terms of the levels of new projects and building programmes, etc.

Long term low-level motivation from an expanding range of controls and extended BMS's arising from the slowly increasing installation of solar heating and solar photovoltaic cells.

Long-term motivation from energy-efficiency and building regulations in refurbishment and retrospective applications.

Niche sub-sector growth opportunities - for example security, protection and detection, access, surveillance (including lighting), fire, temperature control, FM, etc.

Opportunities for market penetration facilitated by the flexibility, accessibility and cost efficiencies arising from the introduction of BMS systems utilising existing IT infrastructures.

Growth of facilities management contracts with long-term maintenance agreements encouraging more emphasis on minimising building operational costs.

However, there are also a number of factors which may act to constrain market growth including:

The adverse impact of the relatively recent but severe decline in commercial construction.

The relatively high 'front-end' capital investment and difficulty in assessing the pay back period for BMS packages under the present economic climate in the UK which tends to act as a 'disincentive' to potential installers of BMS's.

Difficulties experienced in market penetration of the small commercial building sector where 'adequate' operational levels of control are already in place and where significant opportunities for capital investment programmes are relatively restricted.

The structure of the BMS market is complex, involving design, installation and commissioning, in addition to the manufacture of controls and other hardware products.

The companies who supply the market fall into a number of broad categories including Controls Manufacturers, many of whom supply complete turnkey installations as well as advanced controls, System Integrators who buy in controls and other hardware products but carry out design, software engineering, installation and commissioning, and M & E contractors installing and commissioning systems, also Contract Energy Management Systems suppliers and Panel Builders.

The market is dominated by the controls manufacturers, with key companies including Honeywell, Johnson, Satchwell, (Invensys), Siemens Building Technologies, Inviron and Trend (Novar), as well as TA Controls, York, Serck, Tyco and Andover Controls (Balfour Beatty). Systems Integrators include E-Squared, Schneider, Zutec, etc.

Whilst the earlier types of building management system usually controlled Heating, Ventilation and Air Conditioning, there has been an underlying trend towards more integrated building management systems which control the full range of building services including HVAC, Lighting, Fire, Security and Access, as well as data and telecommunications, etc. This trend is likely to continue as integrated systems provide more efficient management and monitoring of the growing range of services installed within modern buildings.

Technological developments facilitating the further extension of BMS's include the adoption of communications standards from IT to operate building control field devices, building automation devices, and management/supervisory functions using the existing IT infrastructure. This avoids the capital costs of separate dedicated systems and also facilitates accessibility, multiple entry, etc, although it is indicated that web technology is unlikely to completely displace the more 'robust' systems to implement fire security emergency, and other safety/reliability functions, etc.

The distribution of advanced control products is highly concentrated. The most common route to market is via systems houses, with direct to end user also representing a significant distribution channel. Other distribution channels include via M & E contractors and OEM companies.

The commercial sector represents the most significant end use sector accounting for some 50% of sales, with key end users including offices, hotels, shops and leisure activities. The public sector currently accounts for some 40% of installations and is driven by PFI schemes and underlying growth in government expenditure on hospitals and schools in the short, medium and long term.

List of Contents

1	INTRODUCTION	5
2	SUMMARY	6
2.1	OVERALL	6
3	ECONOMIC ENVIRONMENT	9
3.1	GDP	9
3.2	INFLATION & INTEREST RATES	10
3.3	STERLING	11
3.4	COMMERCIAL CONSTRUCTION	11
4	THE UK BUILDING MANAGEMENT SYSTEMS MARKET	12
4.1	DEFINITION	12
4.2	MARKET SIZE	12
4.3	MARKET STRUCTURE	19
4.4	PRODUCT MIX	22
4.5	PRODUCT TRENDS AND KEY ISSUES	27
5	SUPPLY STRUCTURE	30
5.1	SUPPLIERS	30
5.2	DISTRIBUTION	34
5.3	END USE APPLICATION AREAS	35
5.3.1	Commercial Sector	36
5.3.2	Public Sector	40
5.3.3	The Industrial, Warehousing and Process Sector	42
5.3.4	Infrastructure	43
5.3.5	Public	45
6	BUILDING SERVICES PRODUCT TRENDS	47
6.1	NON-DOMESTIC SPACE HEATING	48
6.2	VENTILATION PRODUCTS	50
6.3	AIR CONDITIONING	53
6.4	NON-DOMESTIC LIGHTING EQUIPMENT	55
6.5	SECURITY PRODUCTS	57
6.6	FIRE PROTECTION AND DETECTION SYSTEMS	59
7	KEY MARKET INFLUENCES	62
7.1	COMMERCIAL CONSTRUCTION	62
7.2	MANUFACTURING OUTPUT	64
7.3	UNINTERRUPTIBLE POWER SUPPLIES	66
7.4	ENERGY MANAGEMENT CONTRACTS FUNDED BY THE PRIVATE FINANCE INITIATIVE (PFI)	68
7.5	FACILITIES MANAGEMENT	69
7.5.1	Market Size	69
7.6	TRENDS IN CCTV AND SECURITY PROTECTION AND DETECTION	70
7.7	LEGISLATIVE AND THERMAL EFFICIENCY FACTORS	72
8	FUTURE PROSPECTS	76

Tables and Charts

Text © 2004 AMA Research

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Last updated by Amanda Porteous 2004