More M&A activity for energy and carbon management companies

Schneider Electric and IBM both announced plans to acquire energy management software companies this week.

Source: Leslie Guevarra, GreenBiz.com

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In a bid to strengthen its position in energy management services, Schneider Electric announced its plans to acquire energy procurement and sustainability services company Summit Energy Services Inc. for $268 million.

The transaction, which is subject to regulatory approval and closing conditions, is the second major deal announced this week involving companies working to make the built environment more energy efficient, smarter and better connected. Earlier this week, IBM announced plans to acquire Tririga, the developer of enterprise software for real estate and facility management, in order to improve its Smarter Buildings initiative.

“The acquisition of Summit Energy allows Schneider Electric to broaden our energy management services and solution portfolio, offering customers the ability to manage and optimize their energy consumption from the supply side through the demand side, while also growing our energy and environmental online reporting capabilities,” Chris Curtis, Schneider Electric’s senior executive vice president for North America, said.

In the broader context of energy and carbon management, "the recent acquisitions by Schneider Electric and IBM for energy management and software companies show the continued move of larger companies to shore up their offerings," said Paul Baier, vice president of sustainability consulting at Groom Energy and GreenBiz.com senior contributor.

The acquisition of Summit Energy brings Schneider a heavy hitter in the field of customer-focused service platforms for energy procurement and energy management. According to Summit, the 20-year-old firm manages more than $20 billion in annual energy spend for 650-plus companies with facilities in some 90 countries. Summit expects to generate about $65 million in sales this year.

Like many firms operating in the efficiency space, Summit moved from a traditional approach to energy management to expanded offerings that reflect customers' growing needs for sophisticated tools to calculate and manage carbon data. Summit was considered among the top 10 companies providing energy enterprise carbon accounting last year, according to the 2011 Enterprise Energy and Carbon Accounting Buyers Guide.

Such standing made Summit, and other firms like it, attractive to larger companies, such as Schneider. Transactions like the ones announced this week are expected to become a growing pattern.

Baier pointed to other notable acquisitions in the past six months of smaller, nimble and relatively young firms by larger, well-established, big-name organizations. They include EnerNOC's purchase of M2M Communications, a wireless technology provider of energy management systems, and Global Energy Partners, a leader in designing energy demand response programs; Siemens' acquisition of Site Controls, an energy management software company; and Johnson Controls' purchase of demand response specialist, EnergyConnect.

"Look for these large companies -- as well as others like Honeywell, Ingersoll Rand and Rockwell -- to make more acquisitions," Baier said. "Smaller firms that could be acquisition targets include Pace Global, Entech, ENXSuite, Hara, and World Energy. With energy prices beginning to rise and senior management teams much more aware of the energy savings opportunity in their organizations, large corporations are demanding broader and more sophisticated energy management solutions."

Read more about the Schneider Electric/Summit Energy or IBM/Tririga deals.

- Edited by Bettina Chang, Consulting-Specifying Engineer, www.csemag.com