Are you ready for the emerging energy opportunity?

Government IT contractors and systems integrators prospecting for business in emerging markets for new energy technologies will encounter terrain that’s pretty tricky.

For IT companies, the real business opportunities lie in energy management and efficiency technologies that support electrical-supply systems and deploy IP-based controls to save energy, reduce cost and increase reliability and transparency. IP-connected energy-efficiency technologies that are critical to electrical grids typically include smart meters, sensor networks, data analytics tools and cybersecurity.

But the business potential in energy efficiency must be divined from a nuanced market and will require more than just responding to RFPs, sources said.

Ray Bjorklund, vice president and chief knowledge officer at Deltek, said government contractors will have to look for business in places they ordinarily wouldn’t think to look if they want to mine the government market in energy efficiency.

“A pure-play IT company or pure-play software company that might have energy management software that integrates into an [enterprise resource planning] environment shouldn’t sit back and only look at specific opportunities that match their competencies,” he said. “They should be going and knocking on the doors of the larger players who have been delivering big industrial solutions associated with energy delivery.”

Opportunities are growing but they are “going to be embedded much more so than they were in the past,” he said. “As the [efficiency] technologies became more mature over the last decade, the government has done a lot of add-on and bolt-on, and now we would expect that these technologies are going to be built in from the beginning. IT companies ought to be positioning themselves with the ultimate integrators, whether it’s a construction project or a missile defense system. They’re all going to have energy conservation and efficiency built in.”

Bjorklund expects the government to spend “well over a billion dollars” in the coming years on projects that will require energy-management technologies, based on his review of the Obama administration’s 2013 budget proposal. For example, he sees contract dollars coming down the pike at the Tennessee Valley Authority (TVA), a corporation owned by the U.S. government that provides electricity for 9 million people in parts of seven southeastern states.

“TVA plans to spend about $750 million next year on new technologies, some of which will be transformers but all of it will be oriented to much more efficient delivery and reliability for the energy they produce,” he said. These investments will be “addressable dollars, dollars that are probably going to end up in the hands of contractors.”

He also sees prospects at the Western Area Power Administration (WAPA), an agency of the Energy Department, which delivers hydroelectric power within a 15-state region of the central and western U.S. Its transmission system carries electricity from 56 power plants. According to Bjorklund, the WAPA is probably going to spend about $400 million next year to improve energy efficiency.

The Defense Department also has been a big player in energy efficiency because it has “enormous operating expenses in base infrastructures,” Bjorklund said. “DOD got hundreds of millions of dollars in stimulus spending to launch new energy production contracts and to embrace some of the technologies for improving efficiencies and energy conservation,” he said. “That stimulus spending has gone away now but DOD is still investing quite a bit of money in that.”

Elsewhere in government, IT companies also should be able to tap into new energy efficiency contracts to transform buildings with antiquated power systems into “intelligent” buildings. The General Services Administration, to take one example, recently announced that 30 of its federal buildings are participating in an initiative called the Deep Retrofit Challenge, which is designed to make these structures more energy efficient through performance-based contracts.

GSA’s retrofit initiative will contribute to President Obama’s goals on energy savings and also challenge the private sector “to bring innovative, energy-saving retrofits” to federal buildings, the agency said.

“The [energy efficiency] technologies will be there for new construction but the real need is for retro-fitting—to start squeezing some efficiencies out of these older buildings that aren’t efficient right now,” said Shawn McCarthy, research director for IDC Government Insights.

Casey Talon, research analyst for the distributed energy strategies program at IDC Energy Insights, said that the building management industry is undergoing a transformation. “We see this convergence of IT and building automation,” she said. “There’s a lot of opportunity and a lot of growth.”

The ability to collect, view and analyze energy consumption data will be crucial to creating smarter buildings. Thus, opportunities are emerging in data analytics, tools that can crunch the data from all parts of a grid and make it part of enterprise integration, said Steve Teubner, vice president of consulting at CGI Federal.

“There are thousands of data points in these buildings and there’s nobody looking at it,” he said. “The principal challenge is to make sense of what’s going on [with energy distribution]. It’s that situational awareness. You wouldn’t go into battle without a full situational awareness of the battlefield. We run our buildings half blind. We don’t know how the pieces of equipment are operating.”

Sensors and sensors networks in smart buildings are essential to monitoring the performance of the grid’s components. “Sensor networks provide real visibility into how all of the equipment is operating within a facility,” Talon said.

The next step is IP-based connectivity, Teubner said. “The world wants to move to non-proprietary, IP-type technology to connect the pieces of equipment,” he said. “Connecting the building systems in open protocols is a key thing.”

Once the data from the electrical grid is collected, it can be analyzed and made “actionable,” or used to take measures to increase energy efficiency in the grid, he said. “It’s coordinating all those data points, connecting the systems, coordinating the data and then doing something with it.”

To be sure, any government systems that are IP-connected require tight, Federal Information Security Management Act-compliant controls. As a result, energy-infrastructure cybersecurity is another promising area for contractors, according to observers.

Global Analytic IT Services (GAITS), for example, has contracts to provide cybersecurity services to nine Energy Department laboratories.

“The cybersecurity aspect of energy and the smart grid is really in the embryonic stages,” said GAITS chief executive officer Thomas Asefi. “Focusing on energy cybersecurity is critical to the infrastructure of the smart grid. Once [a hacker] gets in the smart grid, it can cause a tremendous amount of damage.”

There’s also room for cloud computing providers to get in on the energy-efficiency boom, according to Teubner. “There’s no reason why you have to have building operations in a building,” he said. “Let’s distribute that. Let’s operate the portfolio remotely.”

CDW-G’s recent 2012 Energy Efficient IT Report concluded that cloud computing could be a “game changer” for energy efficient IT. For example, 62 percent of IT professionals in the public and private sectors in the survey agreed that cloud computing is an energy efficient approach to data center consolidation, up from 47 percent in 2010.

“While cloud computing is a market basket of discrete technologies and services, it is entirely about IT efficiency and as a strategy it can deliver significant energy savings,” said Norm Lillis, vice president for systems solutions at CDW-G.

Overall, it appears that demands for energy management and efficiency technologies will be popping up across the federal landscape. It’s just a matter of knowing where to look.

“We’re just scratching the surface as far as energy efficiency is concerned,” Asefi said.