Due to unpredictable energy costs and rising power demand, energy efficiency programs that lower costs and contribute to eco-friendly goals are increasingly important. And thanks to continuous energy efficiency improvements and technology advancements, the segment holds many appealing investment opportunities. 

Here, senior professionals in our Energy, Power & Infrastructure Group share the key factors driving investor interest in energy efficiency and how recent client CLEAResult exemplifies the sector’s growth potential. 

Energy Management in Transition 

Expanding energy demand and increasingly complex supply are powering long-term demand for efficiency initiatives. For instance, the electrification of everything and the rising need for data centers are generating substantial growth in energy consumption. At the same time, the introduction of new renewable generation sources and the proliferation of distributed energy resources—like EV charging stations and smart meters—are making the grid more complicated. In this evolving ecosystem, energy efficiency models play a critical role. 

“Rising energy demand and complexity will strain the power supply and likely cause higher prices, which magnifies the importance of the energy efficiency sector,” says Drew Spitzer, a managing director. 

Utilities, in particular, are feeling both commercial and government pressure to achieve greater efficiency—especially as federal and state legislation pushes more aggressive energy reduction targets. A further driver of energy efficiency spending is federal funding, namely the Inflation Reduction Act. This alone will contribute billions of dollars toward energy efficiency plans over the next few years, with most flowing through grants and state energy offices to private sector energy efficiency providers. 

“Utilities, individual corporations, and the government are looking to cut emissions and carbon footprints, spurring investment in energy efficiency programs,” explains Luke Semple, a managing director. 

Accelerating demand for such programs bodes well for businesses that specialize in the design, management, and implementation of energy efficiency measures. And due to a lack of internal resources and a preference for experienced administrators, utilities are increasingly turning to these third-party experts. 

“Utilities will continue to rely on third parties as energy efficiency program volume and complexity increases,” says Semple. “Leading outsourced providers, like our client CLEAResult, showcase the immense growth that’s possible in the sector.” 

CLEAResult: Changing How Energy Is Used 

CLEAResult works with the country’s largest utilities on their energy efficiency program design, administration, and assessment. These programs can be implemented at businesses, institutions, residences, or elsewhere in the utility value chain, and are driven by utilities seeking to achieve their energy efficiency goals. 

Although energy efficiency is CLEAResult’s foundational service, the company also solves other critical challenges for its customers through complementary energy transition and sustainability solutions. “CLEAResult’s holistic offering enables it to support a wider range of needs related to energy transformation,” says Neha Shah, a director. “And, like many companies operating in the energy efficiency space, CLEAResult has contracted, recurring revenue with its customers.” 

CLEAResult is a great example of a successful platform helping to change the way energy is used, but it’s just one of many ways to participate in the space. Several different energy management business models are supporting the energy transition and benefiting from market tailwinds around energy consumption, regulation, and spending. 

“Whether providing advisory services, load management, installation of energy efficiency retrofits and upgrades, or other assistance, leading energy management companies have substantial upside in the years to come,” says Semple. 

Surging Opportunity 

As energy usage continues to evolve and expand, demand will remain strong for outsourced providers that create, implement, and manage energy efficiency initiatives. 

“Utilities and corporations will keep seeking third-party support to expertly manage their energy efficiency goals,” says Semple. “We’re excited to see the energy transition drive prolonged growth for energy efficiency companies and other businesses across the energy management ecosystem.” 

To further discuss energy management M&A, please contact our senior professionals.