Commercial & Industrial Companies Perceive Little Value in Switching Electricity Vendors, Finds Frost & Sullivan
- Energy service management providers aim to distinguish themselves by delivering additional services
MOUNTAIN VIEW, California, Oct. 30, 2014 /PRNewswire/ -- Frost & Sullivan conducted a customer survey to determine customer perception and purchase criteria for electricity and energy service management among commercial & industrial (C&I) companies. The survey indicates that US customers are satisfied with their existing provider and very few intend to change their provider at the end of their contract.
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New analysis from Frost & Sullivan, Commercial and Industrial Customers in the US Deregulated Electricity Market, surveyed 250 medium and large C&I companies across five verticals: manufacturing, data centers, hospitals, small franchises, and education.
For complimentary access to more information on this research, please visit: http://bit.ly/1wdtlaX.
Highlights of Survey Findings:
- Among customers with five-year contracts, financial viability and line of credit were more important purchase criteria than power reliability.
- On average, electricity accounts for 9 to 11 percent of yearly operating costs, and up to 20 percent for select customers.
- Approximately 40 percent of C&I customers expect their electricity consumption to increase in the next 24 months.
- Approximately 80 percent of C&I customers are concerned about the future costs of energy.
"Nevertheless, the majority of customers do not plan to switch providers to lower energy costs, as they perceive little product differentiation among the utilities," said Frost & Sullivan Energy & Environmental Principal Consultant Farah Saeed. "Therefore, vendors that focus on product development and enhanced offerings, particularly in the area of energy management, will win new customers."
Energy providers can offer customer value and differentiation through services such as supply management, energy efficiency management, facility optimization and demand response.
However, most customers conduct these functions in-house and do not seek to outsource them to third-party vendors.
Nearly 70 percent of those who did outsource energy management services preferred utilities as the primary vendors. They may be persuaded to collaborate with a third-party energy management solution provider if it can clearly demonstrate operational cost savings.
"Currently, customers do not comprehend the difference between distribution utility and competitive electricity retailer," noted Saeed. "Therefore, appropriate marketing campaigns that promote the benefits of deregulations will go a long way in increasing participants' market shares and brand awareness."
Commercial and Industrial Customers in the US Deregulated Electricity Market is part of the Energy & Power Growth Partnership Service program. Frost & Sullivan's related studies include: Annual Global Power Generation Forecasts; Procurement Best Practices of Power Generation Utilities; Analysis of Transmission and Distribution (T&D) Services; Distributed Energy Storage—Market Opportunities; Annual Global Power & Energy Outlook 2013; ANZ Energy Management Services (EMS) Market in the Industrial Sector. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.
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Commercial and Industrial Customers in the US Deregulated Electricity Market
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Contact:
Ariel Brown
Corporate Communications – North America
P: (210) 247.2481
F: (210) 348.1003
E: ariel.brown@frost.com
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