Demand Response: Honeywell Enters the Fray, Sending Shivers through the Nascent Industry

By Michael LoCascio

Honeywell announced on May 7 that it has acquired Akuacom, a Bay-area company that provides automated demand response technologyand services for the Smart Grid. The acquisitionbeefs up Honeywell's current Smart Grid portfolio by enabling it to provide utilities and independent system operators (ISOs), two-way communication with energy management systems at commercial and industrial sites. This capability lets utilities and ISOs automate the delivery of price and reliability signals to these facilities and more effectively trim peak demand.

Honeywell is already one of the "big four" building controls firms– along with Johnson Controls, Siemens, and Schneider Electric – with nearly ubiquitous temperature and HVAC controls, several of which already interface with demand response software. The company is currently the largest residential demand response player in North America and has a presence in more than 10 million commercial buildings and thousands of industrial plants. As such, adding demand  response technology will let Honeywell leap from inside the building envelope to the utility and provide an end-to-end connection between energy provider and user to reduce peak energy demand and maintain optimum building efficiency.

The acquisition marks the beginning of industry consolidation that will see a handful of winners emerging from the demand response segment, likely including established early entrants like EnerNOC and a half dozen or so alignments between large building control players and key demand response firms – and perhaps one or two stranger alliances between large appliance makers and demand response firms, such as the Tendril-GE pact. Thus, expect a few high-profile demand response acquisitions as the other stalwart control firms quickly follow suit in the wake of Honeywell's Akuacom acquisition, while the vast majority of mass-produced VC-backed demand response and building energy management firms get frozen out of the market and fall off the map.

Michael LoCascio is a senior analyst with Lux Research, which provides strategic advice and on-going intelligence for emerging technologies. Through their unique research approach focused on primary research and their extensive global network, they deliver insight, connections and competitive advantage to their clients. For more information, visit the Lux Research site or contact Carole Jacques to become a Lux Research client.  

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