What is an energy management system?

Energy management system solutions extend to all assets, from buildings and facilities to energy-intensive industrial or manufacturing equipment. Ever-rising energy costs and climbing energy usage rates make the widespread use of EMS solutions in all types of assets both increasingly relevant and prevalent. 

An EMS carries out the following core functions:

• Monitoring: An EMS is constantly on the job, gathering and monitoring all types of energy use data through physical hardware like meters and submeters.
• Analysis: Through sophisticated processing techniques, an EMS can study all the collected data and transform it into actionable insights.
• Control: The EMS is empowered to make direct adjustments to equipment like HVAC systems, so machines always run at desired levels.
• Reporting: Through its continuous gathering of real-time information, an EMS creates executive and financial reports, charts and audit trails.

The basic goals of an energy management system (EMS) are:

• Limit operating costs: Use of an EMS typically yields energy savings of 10% to 30% for companies, depending on its ability to cut energy waste.
• Tweak operational efficiency: An EMS tracks machine performance and monitors the health of large-scale machinery used in manufacturing, climate control and heavy infrastructure.
• Reduce carbon emissions: Using an EMS leads to environmental benefits, such as reduced carbon emissions. 

An energy management system (EMS) is designed to infuse facility management with the power of artificial intelligence (AI). Here are some crucial components of an EMS.

A vital part of the EMS is supervisory control and data acquisition (SCADA), a hardware and software amalgam that acts as the “nervous system” to the “brain” of the EMS. 

SCADA is sensor-based, it gathers real-time sensor data about the equipment operating within the EMS and oversees the operation of physical hardware (like breakers, batteries and valves). The algorithms within the EMS evaluate the collected sensory data and make operational decisions based on all of that information.

SCADA depends heavily on the use of sensors, a vital part of EMS functionality because an EMS is a data-driven enterprise.

Submetering takes the use of sensors even further by using additional sensors to gauge utility consumption in particular building areas or pieces of equipment. Such sensors include devices enhanced with Internet of Things (IoT) capabilities. So, if you’re studying energy usage patterns and want to find out exactly how much energy the HVAC is using, submeters can provide the answer.

An EMS also relies on automated controls—established rules and programmed algorithms that can adjust building equipment without human control.

Building automation systems (BAS) handle everything from timing indoor temperature management to turning off machines of secondary importance during periods of peak usage to sequencing equipment for increased efficiency. Automation also facilitates automated reporting of energy data to prove sustainability compliance. 

The benefits of using an energy management system (EMS) are numerous and fall into several broad categories: economic, environmental and explorative.

• Energy savings: When a company integrates automated controls in its building, that company can save 15% to 30% through added energy efficiency.
• Peak shaving: Peak shaving allows a company to prevent peak demand charges by changing its usage pattern and times. It’s related to demand response initiatives that motivate companies to adopt periods of lower energy usage.
• Asset life extension: An EMS lets you use HVAC and lighting systems strategically, with a resulting boost to equipment longevity.

• Reduced carbon footprint: An EMS helps reduce greenhouse gas emissions to further environmental sustainability efforts by limiting carbon emissions.
• Support compliance: Companies need to prove their compliance with regulatory guidelines. An EMS tracks the necessary data for governmental reports, enabling company actions to be viewed within the ESG (environmental, social and governance) framework.
• Recognizes renewables: An EMS is compatible with renewable energy sources, such as distributed energy resources, like solar panels, smart thermostats and home battery storage systems.
• Occupant comfort: In this case, “environment” refers to indoor climates. An EMS keeps the comfort level consistent and in line with occupant preferences.

• Data tracking: An EMS generates energy consumption data based on real-time monitoring, which can be used to detect areas of waste.
• Predictive maintenance: An EMS enables the use of predictive maintenance to find equipment failures before they can disrupt production schedules. 

Here are 11 basic steps for companies establishing an energy management system (EMS):

1. Secure managerial commitment: The first step—Make energy management a driving concern that’s officially recognized by company management. To achieve the needed buy-in support, it might be necessary to develop a presentation for the upper echelon that clearly indicates the size and scope of cost savings possible, to fully justify further efforts.
2. Organize an energy management team: Company leadership agrees that energy management constitutes a pressing need. Next, assign personnel to lead and staff an energy management team and authorize a budget for its work. Ideally, this team will have representatives from the company’s finance, IT and facilities departments, because those groups will require consultation.
3. Undertake a full energy audit: Before changing your existing system, it’s essential to understand how much energy your company currently uses. The team accomplishes this by participating in a comprehensive energy audit. Establish your present energy baseline by studying past utility bills to determine usage. Find and study usage patterns about departmental use.
4. Establish performance goals: The energy audit will reveal key information about your energy usage patterns and how much they’re costing the company each month. The energy management team can study that starting point and set future goals related to performance. Just how much efficiency does the team hope to achieve?
5. Develop an action plan: Performance goals usually don’t accomplish themselves. The team’s next step is to initiate the necessary actions that will see the realization of those performance goals. In an action plan, the team sketches out the necessary steps that will shape future usage, with particular notice of changes to come.
6. Select appropriate software: Energy management software “converses” with systems and equipment (for example, HVAC, lighting). Companies should review the available options. Choose a system with an intuitive interface for monitoring energy use, setting alerts and pulling reports and analytics.
7. Communicate and execute: The team is now armed with plenty of data. What’s more, the team has articulated performance goals through an action plan and selected its EMS. Now comes the most important step: communicating the plan throughout the company and making sure that every department understands its role.
8. Use industrial-grade hardware: Energy management systems depend heavily on having a steady flow of incoming data, supplied by various monitoring equipment like sensors and smart meters. When installing or replacing hardware, system devices should be industrial-grade quality—for enhanced durability, greater monitoring accuracy and more reliable safety.
9. Install granular monitoring: Granular monitoring takes data to a new level of usefulness, giving you energy usage data about specific devices and times of use. Granular monitoring illuminates areas of energy waste and aids the cause of predictive maintenance by showing usage spikes within a certain circuit, which can serve as a predictor of necessary equipment repairs.
10. Prioritize system communication: An EMS prioritizes network communications according to the importance of data packets and their urgency. Top priority gets awarded to critical or emergency data that needs immediate delivery (like commands related to equipment protection). Routine operational data ranks next in priority. Finally, less urgent messages, like historical data.
11. Review and evaluate action plan: The energy management system is all about enacting processes that prompt ongoing improvement. In other words, using an EMS is not a “one-off.” The team should specify in its action document how often that plan should be reviewed and when it should be evaluated next. During later reviews, energy operations can be tweaked as needed. 

The EMS market covers commercial structures as well as individual home residences. Both markets are driven by robust growth.

The global market for commercial EMS is especially lucrative. Fortune Business Insights lists the 2025 value as between USD 46.58 billion and USD 73.49 billion. However, experts expect that amount to climb to somewhere between USD 150.8 billion and USD 225 billion per year by the early 2030s.

Two main reasons dictate why the home EMS market is considerably smaller, currently between USD 4 billion and USD 4.5 billion. Commercial buildings are larger and more cost-intensive projects, so the equipment servicing those spaces requires industrial-grade quality and therefore proves more costly. The other reason: because home EMS is basically a newer market (which has mostly engaged individual homeowners during recent years). Nonetheless, despite getting a later start, the home-based EMS market is now experiencing comparable rates of growth. Globally, the home EMS market is expected to grow by 17.47% annually between now and 2035.

Why is the EMS market experiencing such steady and upward growth? Because energy costs are almost always rising, and so is global energy demand. An EMS can be an effective hedge against climbing utility costs and rising energy consumption rates, both for companies and residential consumers.