Intelligent building controls and energy management systems have made dramatic advances in recent years, yet most are aimed at the small fraction (between 2% and 3%) of global commercial buildings with floor space greater than 100,000 SF. The remaining 98% of commercial buildings, which according to EIA estimates make up nearly 60% of commercial building energy consumption in the U.S, remain almost untouched by energy management technologies or services. Why are these buildings so difficult to reach?
The characteristics of small-to-medium commercial buildings (SMCBs) are incredibly diverse in use, construction, age, and ownership. This diversity creates two major obstacles – one technical, the other related to incentives. First, if even a small amount of energy control system customization is required for each building, the ROI on the technology investments quickly becomes unattractive. Secondly, many SMCBs are owned by hands-off investors, such as real estate investment trusts (REITs), managed by separate property management firms, and occupied by renters who bear the energy costs without having any control over the associated infrastructure. Even if the ROI is good, there is no incentive for owners to make the “I” if they will not receive the “R.”
In the Big Boxes
Despite the obstacles, significant opportunities for SMCB energy management continue to emerge, driven by demographic shifts and technology advances. The advent of national chain and big-box stores has transformed the retail and food service industries in recent years. While considered a blight by many, the cookie-cutter nature of these buildings, along with aggregated ownership and management of thousands of sites, dramatically reduces the barriers of technical customization and split incentives. The major controls systems vendors now have focused product and services offerings, gained mostly via acquisitions (such as Honeywell/Novar, Siemens/Site Controls, and Schneider Electric/SCL Elements), specifically addressing the multi-site enterprise market opportunity. These solutions enable some level of energy awareness as a first step, but are increasingly enabling advanced demand response and other time-of-use based services, as well.
Building By Building
If the key to SMCB success is site aggregation and standardization, how else can these be achieved? Some pioneering property management firms, such as Jones Lang LaSalle, and design-build-operate-maintain firms such as McKinstry, are offering advanced energy management services within their menu of services. Utilities offer another point of possible aggregation, motivated to achieve ever-increasing energy-efficiency goals mandated by their regulators. The key enabling technologies for both property managers and utilities include advanced analytics services that combine utility meter data and external environmental and demographic data to deliver deep energy insights without the need for any onsite technology other than the utility’s meter. FirstFuel Software, which pioneered this approach, is increasingly targeting SMCBs, even with relatively dumb meters. Gridium, a relative newcomer, is leveraging the growing base of smart meters to gain insight into per-building energy use.
While these approaches may not support the advanced demand response services enabled by onsite control systems, they could enable SMCBs to profitably participate in utility dynamic pricing programs that achieve many of the same goals. And solutions providers may find the revenue growth engine they seek.
Tags: Building Systems, Energy Management, Green Buildings, Industrial Innovations, Smart Buildings Program
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