Energy Engineering Services Outsourcing Market

Market Overview

The global energy engineering services outsourcing market size was valued at USD 325.44 billion in 2022. It is estimated to reach USD 1465.64 billion by 2031, growing at a CAGR of 18.2% during the forecast period (2023–2031). The growing demand for procuring digital services in the renewable energy sector to reduce turnaround time and manual intervention from OEMs is also expected to open new opportunities for ESPs operating in the energy sector during the forecast period.

Outsourcing energy engineering services involves hiring external service providers or companies to handle various energy engineering tasks and projects. Energy engineering involves designing, analyzing, and optimizing energy systems, equipment, and processes to improve efficiency, reduce energy consumption, and minimize environmental impact. Energy engineering services outsourcing allows organizations to leverage the expertise and resources of specialized service providers to meet their energy-related needs without the need for in-house expertise and infrastructure. Outsourcing energy engineering services offers several advantages. Firstly, it allows organizations to access a pool of highly skilled and experienced energy engineers and experts. Service providers often have a team of professionals with expertise in various areas of energy engineering, such as energy auditing, energy management, renewable energy systems, energy efficiency analysis, and sustainable design. This expertise can be tapped into to address specific energy challenges, develop strategies, and implement energy-saving measures.

Secondly, outsourcing energy engineering services can provide cost savings and operational efficiency. Instead of investing in establishing an in-house energy engineering department, organizations can outsource the services as needed, reducing overhead costs and the need for long-term commitments. This flexibility allows organizations to scale their energy engineering efforts based on their requirements, ensuring cost-effectiveness and efficient resource utilization. Thirdly, outsourcing energy engineering services allows organizations to benefit from specialized tools, software, and technologies the service providers utilize. Energy engineering service providers often have access to the latest energy analysis and simulation software, monitoring and control systems, and other advanced tools. These technologies enable comprehensive energy assessments, accurate modeling, and precise data analysis, leading to more effective energy management and decision-making.

Market Dynamics

Global Energy ESO Market Drivers

Increasing Investment in Renewable Energy Resources

Over the past decade, to develop energy security and reduce Carbon Dioxide (CO₂) emissions, the worldwide power sector has observed a shift in capability additions from non-renewable power sources to renewable sources. With an emphasis on decarbonizing the electricity supply, governments worldwide focus on increasing the share of renewable resources in the overall energy mix. For instance, the International Energy Agency, a Paris-based intergovernmental organization, increased global use by 1.5% more than before in the first quarter of 2019. With the increasing investment in renewable energy infrastructure, ESPs will gain more opportunities. Besides, a wide range of favorable regulatory policies has been introduced globally to promote renewable energy sources, which is also anticipated to drive the demand for ESPs over the forecast period.

Investment in new renewable energy capacity has started outpacing the investment in traditional power sources. Hence, OEMs in the energy sector utilize outsourcing services more frequently to enhance quality and cost control for their energy projects. Publicly listed renewable energy infrastructure firms are the major developers and owners of renewable energy worldwide. The growing demand for procuring digital services in the renewable energy sector to reduce turnaround time and manual intervention from OEMs is also expected to open new opportunities for ESPs operating in the energy sector during the forecast period.

Growing Digitization in the Energy Sector

Digital technologies are being adopted in the energy sector as a part of its overall business strategy, which has been sluggish compared to other industries. However, the industry is observing a shift from an emphasis on hardware to the augmented significance of software to make energy systems more resilient, resourceful, and digital. While the chief industrialized countries changed to intelligent manufacturing, termed Industry 4.0, there is an increasing impression on the energy sector, referred to as Energy 4.0. This incorporates the period of automation, the oil and gas era, and the new digital upheaval with the renewable energy era.

Digital technologies comprising big data, analytics, cloud computing, blockchain, machine learning, and distributed energy resource management can aid in overcoming a few of the critical challenges in the market, such as intermittency, balancing distribution-connected generation, aging grids, coping with increasing system complexity, and managing consumer self-generation.

Global Energy ESO Market Restraints

Intellectual Property (IP) and Security Threats

Digitization increases the threat of cyber-attacks in the industry. Outsourcing requires a high level of information exchange between OEMs and ESPs regularly to meet the project requirements and hence involves the risk of IP and security threats. The information collected from end-use industries may be easily filtered and integrated into R&D to ensure constant advancement in the project requirement's solution. Hence, OEMs must employ high vigilance to reduce IP threats. An additional difficulty arises when the information and data are transferred between numerous authorities, predominantly where the vendor utilizes a cloud-based infrastructure for projects.

ESO suppliers with access to classified or sensitive information are easy targets for hacks originating abroad and at home. Even though smaller and medium-sized suppliers may not consider themselves vulnerable, hackers target these firms even more than their larger competitors, as smaller firms are less likely to have embraced advanced IT security protocols. Considering the end-use sectors, there's no scope for uncertainty because the compromised data may have comprehensive, even possibly catastrophic, consequences.

Global Energy ESO Market Opportunities

Advent of Autonomous System

An autonomous energy system is an electronic system designed to communicate and operate in known/unknown surroundings, delivering, storing, and expounding information without being coupled with a power grid. These systems work in external industrial or natural environments along with in‐vivo applications in the therapeutic and diagnostic areas. Autonomous systems are an emerging system type that delivers solutions required to meet the challenges encountered by the industry. Autonomous systems can perform a string of operations where the sequence is decided by the aftermath of the former task or by allusion to external events that are observed and assessed within the system itself. Autonomous systems can achieve functional objectives in intricate domains by making judgments and performing actions in cooperation with or on behalf of humans.

Autonomous systems summon a prospect filled with humanoid robots, self-driving cars, uncrewed aircraft, smart monitoring systems, and drones. The underlying technology continues to mature rapidly, opening gateways for ESPs to offer state-of-the-art products and solutions to cater to the energy sector. Autonomous systems are continually developing to expand the scope of jobs assigned to robots and similar automated machines. There is a new demand for autonomous systems to have the ability to respond to unforeseen turns of responses or events and to make modifications in their behavior appropriately.

Regional Analysis

Based on region, the global energy engineering services outsourcing market is bifurcated into North America, Europe, Asia-Pacific, South America, the Middle East and Africa.

North America Dominates the Global Market

North America is the most significant global energy engineering services outsourcing market shareholder and is estimated to grow at a CAGR of 20.2% over the forecast period. North America indeed holds a significant position as the most significant global energy engineering services outsourcing market shareholder. The region's dominance can be attributed to several factors. First, North America has a well-developed energy sector comprising both traditional and renewable sources. The region is home to many oil and gas companies, renewable energy developers, and technology providers, driving the demand for energy engineering services.

Additionally, North America has been at the forefront of technological advancements and innovation in the energy sector. There is a strong emphasis on research and development, which creates a conducive environment for energy engineering services outsourcing. Service providers in North America often offer cutting-edge technologies and expertise, attracting regional and international clients.

Europe is anticipated to exhibit a CAGR of 16.2% over the forecast period. Several factors contribute to this anticipated growth in the European market. Firstly, Europe has been at the forefront of renewable energy adoption and sustainability initiatives. The region has set ambitious targets for renewable energy generation and carbon emissions reduction. This focus on clean and sustainable energy sources generates an atmosphere suitable for the growth of the energy ESO market. Service providers in Europe offer expertise in renewable energy technologies, energy efficiency solutions, and sustainable practices, supporting the region's transition to a low-carbon energy system.

Secondly, Europe has a well-developed energy infrastructure and a robust regulatory framework. The region has established policies and regulations that encourage energy efficiency, promote renewable energy deployment, and drive innovation in the energy sector. This regulatory framework provides stability and clarity for outsourcing energy engineering services, attracting regional and international clients seeking to leverage Europe's expertise and market opportunities.

The Asia-Pacific region offers significant growth opportunities in the energy ESO market. Factors such as growing energy demand, abundant renewable energy resources, industrial expansion, and the need for sustainable energy solutions contribute to the region's projected growth. With a strong focus on energy optimization, efficiency, and clean energy adoption, Asia-Pacific is poised to play a pivotal role in shaping the future of the energy ESO market.

South America offers significant opportunities in the energy engineering services outsourcing market. The region's abundant energy resources, increasing energy demand, focus on renewable energy deployment, and commitment to sustainability create a favorable environment for energy engineering services. With the right expertise and support, South America can harness its energy potential while ensuring a sustainable and efficient future.

The Middle East and Africa region offers promising energy ESO market opportunities. The region's renewable energy potential, commitment to sustainability, evolving energy infrastructure, and focus on infrastructure development establish an atmosphere that will support the expansion of energy engineering services. With the right expertise and support, the Middle East and Africa can accelerate its transition to a sustainable and diversified energy future.

Segmental Analysis

The global energy engineering services outsourcing market is bifurcated into services, energy sources, and locations.

Based on services, the global energy ESO market is bifurcated into R&D and designing, structuring and layout, digitization, implementation, and maintenance. 

The R&D and designing segment dominates the global market and is projected to exhibit a CAGR of 19.4% over the forecast period. The R&D and designing segment encompasses various energy engineering projects' research, development, and design activities. This includes conducting feasibility studies, conceptualizing energy systems and equipment, analyzing energy efficiency measures, and developing innovative solutions to optimize energy consumption and reduce environmental impact. Outsourcing R&D and designing services provides several benefits to organizations. Firstly, it allows them to access specialized expertise and knowledge in energy engineering research and design.

External service providers often have a team of experienced energy engineers, scientists, and researchers who are well-versed in the field's latest trends, technologies, and best practices. They can bring valuable insights and innovative ideas to enhance energy engineering projects.

Based on the energy source, the global energy ESO market is bifurcated into renewable, non-renewable, and chemical processing.

The renewable segment dominates the global market and is projected to exhibit a CAGR of 20.2% over the forecast period. The renewable energy source segment focuses on energy engineering services related to renewable energy technologies such as solar power, wind power, hydropower, geothermal energy, and bioenergy. These services include feasibility studies, project design, system integration, performance optimization, and overall project management for renewable energy projects. The dominance of the renewable segment in the market can be attributed to several factors. Firstly, a growing global emphasis is on transitioning towards clean and sustainable energy sources.

Renewable energy technologies are vital in reducing greenhouse gas emissions, combating climate change, and promoting environmental sustainability. As a result, there is a high demand for energy engineering services that support the development and utilization of renewable energy sources.

Based on the locations, the global energy engineering services outsourcing market is bifurcated into onshore and offshore.

The offshore segment dominates the global market and is projected to exhibit a CAGR of 20.2% over the forecast period. The offshore segment focuses on energy engineering services in offshore locations, typically marine environments, incorporating wind farms and oil and gas sites in the ocean, and other offshore energy infrastructure. These services include feasibility studies, engineering design, project management, installation and commissioning, maintenance, and inspection of offshore energy systems. The dominance of the offshore segment can be attributed to several factors. Firstly, offshore energy resources, such as wind, oil, and gas, offer significant potential for power generation and resource extraction.

Offshore wind farms, in particular, have been rapidly growing in many regions due to their high energy yield and favorable wind conditions. This drives the demand for energy engineering services to support offshore energy projects' development, design, and operation.

Recent Developments

• March 2023- WorleyParsons announced the acquisition of Amec Foster Wheeler. The acquisition will create a leading global EESO provider with a strong presence in the oil, gas, power, and mining sectors.
• February 2023-Jacobs Engineering Group announced the launch of its new EESO business unit. The business unit will provide EESO services to the oil, gas, power, and industrial sectors.