Building automation is an emerging technology with a lot of growth potential. China’s high levels of urbanization, high population growth make it ideal for implementation of building automation technologies. China’s construction sector is expected to surpass the construction sector of all other countries. China offers immense growth potential to the building automation market.
Definition / Scope
Building Automation Systems are interlinked and centralized networks of hardware and software which monitor and regulate the environment in industrial, commercial and institutional facilities. The Building Automation Systems ensure occupant safety and comfort and smooth operational performance of the facilities.
China’s economy has grown at an unprecedented rate in the past two decades and this has consequently resulted in booming growth in their building sector. China is the second largest building energy consumer after US. Building energy usage accounts for 28% of China’s total energy usage. China’s high energy usage can be attributed to its burgeoning population, rapid infrastructural and economic growth. China has the world’s largest stock of building space.
The Chinese government had issued guidelines encouraging green buildings in the Rio De Janeiro Earth Summit of 1992 but efforts in this direction could not match the speed of China’s urbanization and growth. Extensive efforts are being taken to achieve energy efficiency, reduce the environmental pollution and increase the sustainability of China’s building sector. Out of China’s 645 million square meters of commercial and office space, only 40 million square meters is of green building space as per Chinese National Bureau of statistics.
The Chinese government had implemented various building energy codes with the objective of environment insulation improvement. China has three energy codes in four climate zones for residential buildings and on energy code for commercial buildings in all climate zones. All building constructions have to be done in compliance with the energy codes.
The ‘Three Star Building Rating System’ was another initiative taken by the Chinese government whereby buildings are rated based on their green features and energy performance. This rating system is valid for three years beyond which it has to be renewed.
Market Overview
- The exuberant growth of the Chinese economy, the rapid urbanization and population increase over the past two decades has also resulted in a rapid increase in energy consumption. Building energy usage accounts for 28% of China’s energy usage.
- It has also been predicted that half of the world’s building constructions would occur in China till 2030.
- Energy efficiency is a major concern for the Chinese government and has established several guidelines and building energy codes. This has created a demand for a new generation of buildings- the ‘green buildings’ or ‘smart buildings’.
- The market is highly competitive with several established players. Gradually smaller players are also entering this segment by gaining technical knowledge related to the field.
Market Risks
The building automation market of China is a highly dynamic market and is characterized by high levels of technological innovations as for example cloud based software and services, intelligent equipment and so on. The unprecedented growth of the building automation industry combined with the technological innovations in this market is an encouragement for several new players to enter this segment which is increasing the levels of competition.
Cyber security Threats and System Malfunctions
The demand for building automation market is directly related to the need for up gradations of energy infrastructure. At the same time incidence of cyber security threats and system malfunctions are also on the rise. The sophisticated network of the power and energy distribution infrastructure lacks a strong security framework that can handle intrusions and system malfunctions to ensure integrity and process safety.
Inadequate Technical Knowledge of Operators
A major challenge in the building automation market in general is the inadequate knowledge amongst the operators of these systems. The rapid technological advancements in this field require specialized skills in the contractors. The operators lack basic computer knowledge and lack the specialized training that is required for running the fire alarm systems and the more advanced lighting control systems and digital based HVAC systems.
Top Market Opportunities
China’s building automation market has immense growth potential. China is the leading market or new constructions. The Chinese government has set a goal for achieving 40-45% reduction of carbon intensity by 2020 relative to a 2005 baseline and government policy supports in this direction will continue to provide a boost to the growth in this market.
China‘s rapid industrialization, urbanization and increased levels of air pollution are spurring the demand for energy efficient intelligent buildings or ‘green’ buildings and a need for enhancing the sustainability of China’s urban cities.
Increased Environmental Regulations
- Increased environmental legislation and government interventions and concern for global warming are driving the building automation market growth.
- The demand for energy efficient solutions and enhanced security measures are on the rise.
- The Chinese government is placing greater emphasis on energy conservation and has mandated that green building should constitute more than 30 percent of building constructions in China.
- Government policies on design standards and energy efficiency are driving the building automation market in China.
- The Chinese government has set a goal that green building space in China would be reaching more than 1 billion square meters by 2015.
- The Chinese government has also established an energy auditing system for large public buildings and government buildings.
Targeted Solutions for Different Verticals
The China Building Automation market is experiencing a new trend of offering targeted customized solutions to different key end user verticals. The Chinese airports and data centers are the fastest growing verticals. Building Automation Controllers containing embedded actuators specifically designed for the pharmaceutical industry that enable adoption of pressure control measures in a more efficient manner.
IOT in Building Automation
IOT or Internet of Things enables greater connectivity and generates large amount of data which can be used for energy efficient building management solutions. This helps them to reduce energy costs.
Market Drivers
China has in the past two decades experienced an unprecedented boom in infrastructure and building construction industry. Half of the world’s building constructions will be made in China as per World Bank reports, till 2030 and China’s building energy consumption is expected to grow by 45% till 2035.
Smart Buildings
Energy efficiency was not a major concern for the Chinese government and builders until recent years. Energy conservation has become a major concern in China and thus an emerging trend is being witnessed for ‘smart buildings’.
Smart buildings use intelligent information and communication technology based network and devices, to connect a variety of subsystems during operations so that these systems can share information to improve performance.
They are connected to the smart power grid and they enable interaction between occupants and building operators.
- Technologies used in the smart buildings are Building Energy Management Systems (BEMS) and Building Information Modelling (BIM).
Market Outlook
The building automation market in China is expected to experience immense growth in the coming years. The need for energy efficiency and better integration will drive this market. The application segments for building automation would also broaden gradually. Better centralized control, ease of operations, reduction of energy usage will further provide a boost to this market.
The Building Automation Market in China was estimated to be US$ 181.96 million in 2013 and is forecast to reach US$ 553.52 million, growing at a CAGR of 24.92%
Competitive Landscape
People across the world are gradually realizing the importance of reducing carbon dioxide emission and improve energy efficiency. These two factors are directly impacting the building automation systems market.
Players in this market with greater IOT knowledge and better knowledge of integration will have an edge over others. Demand for building automation system is increasing across a wide range of application segments ranging from government and municipal sectors to corporate sectors.
The building automation market of China is dominated by large players but smaller vendors are also contemplating on entering the segment by gaining the technical knowledge required in this field.
Competitive Factors
The Building Automation market of China is characterized by high levels of competition and the distinguishing factor for players in this industry is competitive pricing of products.
The cost of building analytics software is increasing with the increase in demand for additional features like green data analytics for buildings. Vendors in this industry can ensure success by providing customized solutions, end to end solutions, obtaining better technical knowledge, ensuring system interoperability, better after sales service, end-user oriented approach and by focusing on branding.
