The Smart Energy Management System (SEMS) market is an important strategic opportunity for electrical distributors and will require them to stretch beyond their traditional capabilities. This research explores the opportunities and strategies to take advantage of the growing commercial and residential sectors. > While still in the early stages of adoption, US residential and commercial SEMS market exceeds $3.5B today and is forecasted to surpass $8.3B by 2020 > Market growth is underpinned by strong and accelerating customer demand, and driven by improved solution economics for customers, regulatory compliance, and environmental sentiment > Distributors perceive SEMS as critical to their company’s success; it is an opportunity for both competitive differentiation and to evolve traditional distributor business models

1. NATIONAL ASSOCIATION OF
ELECTRICAL DISTRIBUTORS
Smart Energy Management Systems:
Unlocking Opportunities for Growth

2. EDUCATION &
RESEARCH FOUNDATION
EXECUTIVE
SUMMARY
The Smart Energy Management System (SEMS) market is an
important strategic opportunity for electrical distributors.
While still in the early stages of adoption, US residential and commercial
SEMS market exceeds $3.5B today and is forecasted to surpass $8.3B by
2020.
Market growth is underpinned by strong and accelerating customer
demand, and driven by improved solution economics for customers,
regulatory compliance, and environmental sentiment.
Distributors perceive SEMS as critical to their company’s success; it is an
opportunity for both competitive differentiation and to evolve traditional
distributor business models.
While most electrical distributors are taking some steps to capitalize on
the SEMS opportunity, few believe they are executing against a fully-
developed strategy.
•
•
•
•

3. EDUCATION &
RESEARCH FOUNDATION
The SEMS market consists of lighting and HVAC sensing, control,
and automation technology
SEMS Market Definition
Drainage Water
Reuse System
Elevator
Monitoring
System
Video
Monitoring
System
Room Access
Control System
Disaster
Prevention
System
Building Energy Management Software
MONITORING/CONTROLAUTOMATIONACTIVATION
Lighting Control
Systems
Controllers
Sensors
(occupancy, light)
Batteries
Display Devices
HVAC Control
Systems
Controllers
Sensors
(temp, humidity, CO2)
Batteries
Display Devices
Other EMS Systems1
(e.g. plug load control)
Controllers
Sensors
Batteries
Display Devices
Smart appliances
SEMSMarket
Light Bulbs, Light
Fixtures, Wiring,
Other
Fans, Condensers,
Wiring, Other
Traditional
appliances

4. EDUCATION &
RESEARCH FOUNDATION
Most electrical distributors are actively developing and
executing a SEMS strategy
MOST DISTRIBUTORS REPORT THAT THEIR SEMS
STRATEGIES ARE MODERATELY OR VERY WELL DEVELOPED
HOWEVER, MOST DISTRIBUTORS BELIEVE THEY FALL
SHORT OF BEST PRACTICES
Survey Question: How developed is your company’s Smart Energy Solutions strategy?
46%
27%
18%
6%
I Don't Know
Not Developed
Slightly Developed
Moderately Developed
Very Developed
3%

5. EDUCATION &
RESEARCH FOUNDATION
Distributors report that SEMS has been a growth engine for them,
and expect that trend to accelerate
18.9%
Much faster
Slightly faster
About the same
Slightly slower
39.6%
30.2%
11.3%
HISTORIC SEMS SALES GROWTH, RELATIVE TO REST OF COMPANY
Last 3 years 2014-2017
Source: HLSC Analysis of NAED member survey 2017
EXPECTATIONS FOR SEMS FUTURE SALES GROWTH
Don't know
Significantly increase
Slightly increase
Stay about the same
64.4%
Next 3 years 2017-2020
3.4% 5.1%
27.1%

6. EDUCATION &
RESEARCH FOUNDATION
SEMS Segmentation
SEMS are a part of all markets in the electrical distribution channel: residential, commercial
and industrial. Due to the extensive scope of the SEMS topic, this study focused on resi-
dential and commercial segments. Some of the insights shared in the SEMS survey taken
by NAED members are reflected here. The full survey analysis is in Part 1 of Smart Energy
Systems: Unlocking Opportunities for Growth.
27.1%
End customers decide if and how to
include SEMS in their retrofit plans
Architects &
Engineers specify
types of SEMS
to be included
in project
4
Contractors perform
detailed engineering
and decide what
types of SEMS will be
included in project
5
6
NEWCONSTRUCTIONRETROFIT
DIY Retrofit
Custom
Single-Family
Homes and
Large Retrofits
1
New Tract and
Multi-Family
Homes
2
3
Residential Segment
By type of home and project
Commercial Segment
By project type and decision maker

7. EDUCATION &
RESEARCH FOUNDATION
Residential SEMS segment is substantially smaller than
commercial, but is growing at a rapid pace
27.1%
RESIDENTIAL SEGMENT COMPRISES <15% OF MARKET…
Residential
Commercial
2015
3.1
0.5
3.5
2020
7.1
1.2
8.3
North America, USD Billion
19%

8. EDUCATION &
RESEARCH FOUNDATION
Smart home purchases are concentrated in early
technology adopters
SMART HOME SYSTEM ADOPTION, BY TECHNOLOGY ADOPTION SEGMENT
Have Not Adopted Smart
Home Devices / Systems
Adopted Smart Home
Device / Systems
Innovators Early adopters Early majority Late majority Mainstream
Millions of Households1
, 2014
54%
6.3
46%
79%
20.4
21%
89%
37
11%
95%
24
5%
96%
9.7
4%
Self-described Technology Adoption Segment

9. EDUCATION &
RESEARCH FOUNDATION
Commercial segment represents a $3.1B opportunity, and is
concentrated in new construction projects
COMMERCIAL SEGMENT COMPRISES 85%+ OF SEMS MARKET…
Residential
Commercial
2015
3.1
0.5
3.6
2020
7.1
1.2
8.3
North America, USD Billion
18%

10. EDUCATION &
RESEARCH FOUNDATION
As Electrical Distributors look to advance their SEMS business,
addressing key barriers to adoption will be essential
COMMERCIAL SEMS ADOPTION BARRIERS (AVERAGE RATING)
Upfront costs
too high
End customers
unaware of benefits
Architects/ Engineers
lack technical knowledge
Architects/ Engineers
unaware of benefits
Savings potential
too low
Integration
challenges
Security
concerns
Technology not yet
sufficiently developed
Other
Despite cost
declines and
increasing benefits
of rapidly evolving
SEMS solutions,
greater education
and awareness will
be critical to driving
commercial
adoption.
No
Impact
Little
Impact
Moderate
Impact
High
Impact

11. EDUCATION &
RESEARCH FOUNDATION
Download the full report at
naed.org/sems
EDUCATION &
RESEARCH FOUNDATION