Ameresco, Research Paper Example
Words: 1565Research Paper
Ameresco is the leading provider of energy efficiency solutions for facilities across the United States and North America. Established in 2000, Ameresco was founded by George P. Sakellaris who had two previously successful energy services companies. Since its establishment, the company has thrived, more than 2,000 customers, primarily including government agencies, educational and healthcare facilities, and other institutional, commercial and industrial entities, such as manufacturers and hotels. (Ameresco, 2013) “Their solutions enable customers to reduce their energy consumption, lower their operating and maintenance costs and realize environmental benefits.”(NASDAQ, 2012) Their all-inclusive set of services addresses just about all facets of using and purchasing energy within a facility. Ameresco’s “principal service is the development, design, engineering and installation of projects that reduce the energy and operations and maintenance, or O&M, costs of our customers’ facilities.” (Ameresco, 2013) The business model that Ameresco follows is to provide customers with the best energy efficiency services in all developmental capacities.
Ameresco services include providing facilities with upgrades to the energy infrastructure; and the assembly and process of minimal renewable energy plants. Since Ameresco is of one the few large independent energy efficiency service providers, “they are able to quantitatively select and provide the products and technologies best suited for a customer’s needs.”(Ameresco, 2013) Ameresco has grown from a modest four home offices within three states in the US in 2001 to presently 56 offices in the US and Canada with plans to expand more. Ameresco’s competitors include Honeywell, Constellation Energy, Johnson Controls and Chevron Energy Solutions. What Ameresco provides, “a comprehensive set of services that includes the design and installation of upgrades to a facility’s energy infrastructure, design and construction of renewable energy plants and the arranging of financing for customer projects; we also sell renewable energy products.”(Ameresco, 2012) After a decade, the company went public and sold 6 million shares in their stock, an offering that tallied to $60 million.
The generic business strategy that applies to Ameresco is a best-cost provider strategy which gives customers more value for their money by incorporating good-to-excellent product attributes at a lower cost than rivals; the target is to have the lowest or best costs, and prices compared to rivals offering products with comparable attributes. (Camera, 2012) Ameresco follows a specific sales and marketing approach to appeal to their customers. “Our sales and marketing approach is to offer customers customized, and comprehensive energy efficiency solutions tailored to meet their economic, operational and technical needs.” (Ameresco, 2012) In the year 2011 alone they serviced over 1000 customers. In 2010 and 2011, more than 80% of their revenue was derived from federal, state, provincial or local government entities, including public housing authorities and public universities.
From their beginning, their revenue has increased from $20.9 million in 2001, in their first full year of operations, to $728.2 million in 2011, and subsequently to $618.2 million in 2012. (Forbes, 2013) Their acquisition of Seattle based Quantum Engineering and Development, an Energy Services Company expanded the company’s presence in the Pacific Northwest and was partly responsible for their increased in revenue in 2010. “The market for energy efficiency services has grown significantly over the last 20 years, driven largely by rising and volatile energy prices, advances in energy efficiency and renewable energy technologies, aging facility infrastructure, governmental support for energy efficiency and renewable energy programs and growing customer awareness of energy costs and environmental issues.”(Ameresco, 2012) Ameresco response to the market is providing customers with the best options. The customers are responding to this strategy demonstrated in their spike of revenue of 33.7% derived through two sources energy efficiency and renewable energy solutions. (Ameresco, 2013) Demand in their services and projects (building and customizing energy solutions for customer), created from their high quality, low costs prices. Renewable energy revenue increased 85.4% from its customers. According George P. Sakellaris, President and Chief Executive Officer of Ameresco, “Ameresco’s experienced continued double-digit growth in revenue from our all other offerings, in 2012.”(Business Wire, 2013)
This business strategy is supported by their competitive strengths. “One-Stop, Comprehensive Service Provider.” (Ameresco, 2013) Ameresco uses their expertise on using energy within facilities with an experienced engineering staff. Project development allows them the flexibility to combine their energy efficiency measures best suited for achieving their customers’ environmental goals. “Ameresco is an independent company with no affiliation to any equipment manufacturer, utility, or fuel company.”(Ameresco, 2013) It gives them the freedom to select the correct technologies and products from a various manufactures to optimize solutions for their customers. Ameresco has a strong customer relationships, “Our design, engineering and support activities, which typically span multiple years, fosters a close relationship with our customers, which positions us to identify their future needs and provide additional services to them.”(Ameresco, 2013) Their expertise in energy saving strategies that include heating, cooling, lighting, water, renewable energy, and other infrastructure systems helps drive the market.
Ameresco has a strong international presence.” We have a nationwide presence in both the United States and Canada and serve certain of our customers in European locations that are able to serve customers in European locations.”(Ameresco, 2013) This competitive strength allows them to be faster, flexible, and provide cost-effective solutions to customers. Ameresco’s strategic acquisitions and integrations allow the company to provide a broad array of offerings, which expands their geographical reach; and allows them to grow. (Ameresco, 2013) What sets Ameresco apart from other energy companies are that they meet federal and state qualifications. The industry are, “energy efficiency companies often offer their products and services through energy savings performance contracts, or ESPCs. Under these contracts, energy efficiency companies assume certain responsibilities for the performance of the installed measures.” (Ameresco, 2012) In order to provide these services companies have to seek the correct qualification, these requirements are the same within over 20 states that have the similar qualifications that Ameresco meets. Ameresco has qualifications in delivery, quantity, which provides Ameresco with the opportunity to continue to grow their business with federal, state and other governmental customers and “differentiates them from energy efficiency companies that have not been similarly qualified.”(Ameresco, 2013)
The company follows this business strategy because it is able to meet the needs of their customers that include government, and school institutions that allow them to be one stop and comprehensive service provider for their customers. Ameresco is able to provide all the energy savings solutions, development, and other services for their customers in one package. “Best-Cost provider strategy is used when it is important for an organization to achieve the advantages of both differentiation and low cost.”(Lewis, pg. 108, 2011). This model is illustrated not only in their business model but also in their financials. Their acquisition and lower cost per unit provides them with a higher profit and maximized revenue.
Their strategic acquisitions have been the keys to their success. When companies such as Ameresco use the best cost strategy, their aim is to generate competitive advantage by giving buyers more bang for their buck. An approach that involves having similar concepts as close rivals on key quality, features, services, performance aspects, and besting them on their costs of integrating such qualities into the product and services. As revealed in their annual reports Ameresco in 2011 made three key strategic acquisitions that included Applied Energy Group, Inc. (AEG). An acquisition on energy efficiency and demand side management consulting services provider which helped to expand their service offerings to utility customers. APS Energy Services Company, Inc., Renamed Ameresco Southwest. “It is a company that provides a full range of integrated energy efficiency and renewable energy solutions, strengthened our geographical position in the southwest.”(Ameresco, 2012) The third acquisition was of XChangePoint an energy projects business from Energy and Power Solutions (EPS) that expanded their services products to industrial customers and private sector commercial. The three acquisitions have helped the business offer their customer with more energy efficiency solutions that encompass, “the food and beverage, meat, dairy, paper, aerospace, oil and gas and REIT industries.”(Ameresco, 2012)
If the company continues with these strategic acquisitions they will continue to reap the benefits of customer retention, profit, and revenue growth. Why this strategy works for the company is that they offer their customers options that other companies cannot match. They continue to build onto their services by acquiring businesses that will help to normalize the costs of becoming energy efficient for any level of customer. “Mr. Sakellaris’ vision was to create a company that provides its customers a broad range of customer focused services with the stability to deliver on its promises.”(Ameresco, 2012) If they continue with their strategic approach to company acquisitions they will capitalize on their founders vision and be successful in the long run. Ameresco has built a brand and reputation that keeps their customers ordering more products and making their business a leading provider. “Energy efficiency is one of the most important ways that businesses and other major power users can cut costs, and Ameresco is in the business of helping institutions make their systems more energy-efficient.”(Caplinger, 2013)
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