Navigant Research Blog

Energy Efficient Solutions for Retail Stores Begin To Emerge

— July 23, 2014

The retail landscape is in flux, to say the least.  Earlier this year, Staples announced the closure of 225 stores.  Troubled Best Buy isn’t closing any stores this year, but it was one of the several retailers to close stores in 2013).  Things aren’t all so bleak for big box retail, though.  Costco is in the midst of a 5-year plan to open 150 new stores.  Meanwhile, Walmart announced a strategy of shifting toward 10,000 SF to 40,000 SF grocery and convenience-type stores, away from 200,000 SF superstores.  Large retailers are rethinking their physical footprint.  Part of the shifting landscape comes down to the fact that brick-and-mortar stores, particularly warehouse-type stores, are costly to operate.  Moreover, the energy efficient operation of these assets is hindered by factors such as unpredictable occupancy, high ceilings, and vast open space.  However, smart building technologies are being developed for the specific challenges that face retail buildings.

There are numerous approaches to improving the energy efficiency of buildings (see Navigant Research’s reports Energy Efficiency Retrofits for Commercial and Public Buildings and Building Energy Management Systems).  But many of these aren’t appropriate for large, big box retail buildings.  A recent brief from Johnson Controls’ Institute for Building Efficiency provides a thorough analysis that quantifies the cost and payback of various building efficiency improvements for commercial office buildings.  It details 16 measures that represent 90% of possible energy savings.  Unfortunately, most of those do not address big box retail; they focus on using energy for building occupants, not for empty spaces.  That translates to providing cooling, lighting, and even power for computers only when occupants are in the space.  Though these measures work in office buildings, healthcare facilities, schools, and many other commercial buildings, they don’t provide the same opportunity to many retail spaces.

What does a smart retail look like?

Many retailers have aggressively pursued demand-controlled ventilation, lighting and controls upgrades, and advanced efficiency compressors for HVAC and refrigeration to reduce operating costs.  But the cutting edge of smart building technology for retailers focuses more on the consumer experience than on energy efficiency.  GE Lighting and BryteLight, for instance, are using next-generation LED fixtures to provide location-based services for retailers.  Similarly, the Open Group, a consortium that enables the achievement of business objectives through IT standards, has outlined a use-case of using sensors to provide real-time information to retail customers.

However, Massachusetts Institute of Technology’s SENSEable City Lab has recently unveiled a concept to use smart sensing technology to reduce energy consumption.  Local Warming creates a controllable heating zone around an individual occupant, leaving the rest of the space at a neutral temperature.  The solution relies upon a Wi-Fi-based motion tracking system that controls a system of mirrors and rotating motors to direct an infrared energy beam onto an occupant.  In the future, LED technology can further reduce the complexity of the system by allowing a more distributed source of infrared heat.

Local Warming Concept

(Source: SENSEable City Lab)

While the system is not specifically designed for retail, the most compelling application for Local Warming is clearly big-box retail.  These retail spaces are typically large and sparsely occupied.  Additionally, infrared heating has long been employed in large retail spaces.  Infrared heaters, which transfer heat through radiation rather than convection, warm occupants without having to warm the air.  In warehouse-like stores, with lots of air relative to the number of people in it, infrared provides an efficient method of heating.  Local Warming may signal a shift in the use of advanced sensor and location-based services in retail to the development of more advanced efficiency solutions.


Li-Fi Turns Light into a Data Stream

— July 13, 2014

Since Harald Haas demonstrated the ability of light-emitting diode (LED) lights to transmit data during a TED Talk in 2011, the promise of Li-Fi (short for light fidelity) has received a lot of attention.  As researchers develop faster and faster communication speeds, the application of the technology to the building space appears both realistic and attractive.  Commercially, General Electric (GE) has demonstrated the viability of the technology through its launch of LED-based communication for retail environments.  Li-Fi could be cheaper and consume less energy than existing wireless communication technologies that rely on radio frequencies (RF).  Smart buildings, which require a dense and flexible control network, present an interesting application for a Li-Fi deployment, particularly with the increased adoption of LED lighting.


Li-Fi seems to be a compelling alternative to the RF technologies that are currently in use today.  First, the RF available to building automation is crowded.  Moreover, as the Internet of Things becomes more pervasive, more and more communication nodes will further saturate the environment.  RF travels through walls.  So, a node in an adjacent room will be competing for detection.  But Li-Fi is impervious to this problem.  Since the range of any individual Li-Fi node extends only to the nearest wall, the communication in one room will never interfere with other communication in a different room.  In other words, the inherent limitations on Li-Fi range are an ideal solution for saturated networks.  Moreover, more than just crowding, interference from microwaves and other devices can be a problem, particularly in medical environments.  Li-Fi is immune to RF interference.

Security is another area of concern for wireless communication.  It’s relatively easy to hack a Wi-Fi network.  Li-Fi, on the other hand, has a shorter range and requires line-of-sight.  As a result, it is inherently more secure.  You have to be within the range of the transmitter and receiver, shifting the threat of IT security to more manageable physical security.

The Bad News

The technology faces some serious technical challenges before widespread adoption, though.  In addition to enhancing security, the line-of-sight requirement also presents challenges.  Though Li-Fi is immune to RF interference, it is susceptible to interference from a more ubiquitous source: the sun.  Receivers placed close to windows could be rendered ineffective.  Additionally, lighting in buildings is typically designed to be unidirectional, from the light source to the space to be illuminated.  But communication networks must be bidirectional to both send and receive data.   In order to create a Li-Fi network, lights would need to be installed to point at each other, which is at odds with their intended functionality.

Despite these drawbacks, Li-Fi could overcome several of the barriers facing wireless.  Though most of the current buzz focuses on visible light communication, using infrared light could solve many of the hurdles.  Windows can be designed to block infrared light but allow visible light to pass, eliminating problems of solar interference.  Infrared also has greater potential throughput of up to 5 to 10 gigabits per second.  Overall, the challenges facing Li-Fi are no greater that the challenges facing RF.  The technology appears to be several years away from successful deployment in building automation.  But it’s coming.


Green Buildings Get Capital Vote

— July 2, 2014

While Congress drags its heels on climate change legislation, the District of Columbia has become a leader in green building requirements.  The D.C. Green Building Act of 2006 requires that all new private development projects 50,000 SF or larger qualify for the LEED-certified designation.  As a result, Washington not only has more LEED-certified buildings than many states, but also has the second-largest number of ENERGY STAR-certified buildings of any city in the United States (Los Angeles is first).  As the number of green buildings in the nation’s capital increases, attention is being focused on the actual energy efficiency performance of these buildings.

The Washington Examiner, a local tabloid, provided a shockingly poor analysis of the impact that LEED certification has on buildings in D.C.  The report looks at data provided by the district government on energy intensity based on actual utility bills to determine if buildings constructed to LEED standards are more efficient than buildings that are not.   The analysis examines the performance of buildings over a set period of time and compares a group of LEED buildings to non-LEED buildings.  But buildings are considered to be LEED buildings if construction to meet LEED standards has been completed, is ongoing, or is even just planned as future work.  Examining projects such as Ballou High School (estimated completion date: June 2015), Stuart-Hobson Middle School (December 2015), and Lafayette Elementary School (August 2016), the report overlooks the fact that the performance benefits of building to LEED standards are not realized until after construction.  Rather than conclude that the buildings with the poor energy performance were chosen to be renovated to meet LEED standards, it concludes, bizarrely, that LEED standards are meaningless.

Commissioning Key

Though it may be easy to dismiss this analysis outright, it raises an important question about how to ensure that a building’s performance is aligned with its design.  During operation, buildings drift toward inefficiency.  Periodic commissioning of mechanical, electrical, and plumbing systems can optimize the building’s performance.  (This process is described in Navigant Research’s report, Building Optimization and Commissioning Services, from 2012).  Indeed, the LEED standard for new construction requires fundamental commissioning of buildings and provides an additional credit for enhanced commissioning.  However, commissioning is rarely repeated more than once every 3 to 5 years.  The drift in building performance is an opportunity for new approaches to energy savings.

The U.S. Green Building Council (USGBC) is attempting to capitalize on this opportunity through the launch of its dynamic plaque, which provides an ongoing LEED rating to measure and display a building’s rating in close to real time.  But a dynamic plaque still needs an operator to diagnose and address changes in performance.  The future of well-tuned buildings lies in ongoing commissioning, which automates the process.  Solutions available from several building energy management system vendors not only monitor performance, but also detect anomalies and recalibrate the control system to meet ideal parameters.  By applying fault detection and diagnostics-based algorithms that track individual control and equipment performance on an ongoing basis, continuous commissioning provides the best opportunity to guarantee that green buildings are energy efficient buildings.


China’s Coming Property Crash

— June 6, 2014

The sheer magnitude of building growth in China has been remarkable.  According to the Financial Times, China produced more cement in just 2 years, 2011 and 2012, than the United States produced in the entire 20th century.  China’s unprecedented urbanization has resulted in hundreds of millions of migrants flocking to China’s cities to manufacture the country’s exports and build its infrastructure.  This, in turn, has driven an unsustainable combination of a gravity-defying growth in construction coupled with rapidly rising housing prices.   If China is indeed in a property bubble, the correction could be painful.

Concerns about a Chinese property bubble were raised as early as 2010.  Ordos, a city in Inner Mongolia, undertook an ambitious project to develop a 12-square-mile area of empty land outside of the city into a thriving metropolis.  Rather than a thriving metropolis, the $1 billion project resulted in a ghost town when the project failed to attract residents.  In early 2011, when banks tightened credit, coal companies, upon which the resource-rich city depended, consolidated.  As a result, property sales stalled, precipitating a collapse in prices.  Ordos wasn’t the only casualty.  Several other major cities throughout China experienced price declines, leading many, including The Wall Street Journal, to declare the end of the property bubble in China to be imminent.

Impact on Smart Buildings

Indeed, prices did retreat in 2011.  But rather than burst, they rebounded, buoyed by sustained demand in China’s top cities.  But recent weakness in Chinese economic indicators has again raised concerns of a burst.  Economists at the Japanese bank Nomura have declared, “it is no longer a question of ‘if’ but rather ‘how severe’ the property market correction will be.”  Newly started construction for the first 4 months of 2014 is down 22.1% compared to a year earlier.  Even Pan Shiyi, a real estate tycoon and chief of Soho China, thinks China’s property market is headed for catastrophe.

The exceptional growth of construction in China has been a strong driver of building controls and automation in recent years.  A property bubble burst could, therefore, have disastrous consequences on the market for smart building technologies.  However, if there is softness in the Chinese market, no one seems to have informed the leading global manufacturers of building controls.  Honeywell, Johnson Controls, Schneider Electric, and Siemens have all reported a continued strong market in China for the first quarter of this year.

A Series of Collapses

Part of the story is momentum.  A collapse in construction activity will lag a collapse in land and property prices.  Controls equipment manufacturers may even lag behind construction activity.  Also, although indications of a plunge in construction prices are strong, it hasn’t occurred yet.  China has been in the position of having economic data pointing to it being on the cusp of a property bubble burst before.  Its chronic oversupply and perpetually buoyant prices may be unsustainable, but the market can remain irrational longer than you can remain solvent.

When the burst does come, advanced controls may prove to be more resilient than the overall market.  China has a significant proportion of aging buildings.  If the country is to reach the energy efficiency goals laid out in the 12th Five-Year Plan, advanced controls will need to be part of the equation.  Those aging buildings will be prime candidates (and great revenue sources) for energy efficient retrofits.


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