Navigant Research Blog

Is BlackRock’s Climate Change Announcement a Spark or a Sleeper?

— March 13, 2018

BlackRock, the world’s largest asset manager, has taken on long-term investing, and this will have some cascading impacts throughout the investment community. According to CEO Larry Fink, “To sustain [long-term] performance, however, you must also understand the societal impact of your business as well as the ways that broad, structural trends—from slow wage growth to rising automation to climate change—affect your potential for growth.”

This is a clear statement that climate change is a relevant and crucial factor when examining long-term performance. Climate change can be evaluated with respect to direct impacts on a portfolio or a business (e.g., sea level rise, increased storms, and natural disasters), or climate change impacts can be evaluated indirectly (e.g., how a portfolio or a business can respond [positively or negatively] to regulatory shifts or consumer trends).

But what does BlackRock’s pronouncement mean for the corporate community at large? Certainly corporations pay attention when big players act. For example, Walmart’s sustainability programs are maturing and focusing on its supply chain, and Coca Cola now regularly reports on its sustainability progress. This is leadership in action. But for the long tail of smaller businesses (even in the Fortune 1000), what BlackRock’s announcement will trigger is uncertain. Below are some possibilities.

BlackRock Triggers the Avalanche

It is possible that BlackRock’s approach will influence decision makers in the board room and in the investment houses to take immediate action with respect to their operations and portfolios. Recent announcements by Amazon, JPMorgan, Chase, and Berkshire Hathaway to create their own healthcare system in light of rising costs and government stagnation shows how the big players in corporate America are taking charge of initiatives funded by governments in other countries. We Are Still In is another such effort.

Companies Will Want to Be First to Be Third

Other large financial and investment companies may follow BlackRock’s approach. But the majority of corporates may wait until more Fortune 1000 companies start turning these announcements into action before they act. This could come in the form of seeing who signs up for science-based targets (only 342 as of this witting) or reports their emissions to CDP. The second wave of “light green” companies will follow, triggering the race to be “first to be third”—or to be relevant—before climate impacts become table stakes.

Silence

It is possible that not much will happen in corporate America. While the benefits of long-term planning are becoming clearer in Europe—especially accounting for climate impacts and carbon accounting—that is a different market. The concepts of the circular economy, direct climate change impacts, and carbon accounting are still unknown to most businesses in the US. They may be paying attention more and more, but until climate and sustainability action is clearly a stick or a carrot, they could be slow to act.

So, what does this mean? Which scenario will play out? It is too early to tell, but this is a newly fast-moving environment. Navigant will be watching this space closely.

 

Commercial Buildings and Printed Electronics: Staid No Longer

— June 17, 2016

modern square and skyscrapersThe staid modern commercial building is in a state of evolution. The change is both cerebral and physical—and occurring at a rapid pace. New sensors, analytics, and controls that improve efficiency, services, and occupant comfort and safety while making the facilities cheaper to operate are coming to market. Navigant Research expects the global building automation system (BAS) market to grow from $58 billion in revenue in 2013 to $91.9 billion in 2023. This relatively modest growth does not capture the additional value that new and advanced sensors and controls—enabled with new technologies such as printable and flexible electronics—will bring to commercial office space.

A Fusion

Printed electronics can be hailed as close to the pinnacle of the digital age, a fusion of mass production, computer design, and innovations in circuit board printing and microfabrication. The domain of commercial building applications, while well-established, has the potential to be a rich application for printed electronics. This is due to two main factors:

  • Building technology is rapidly adopting fully digital controls and energy efficient applications.
  • The flexible and extensible nature of printed electronics as a platform enables close to infinite customizability of the equipment and devices themselves.

The Role of Printed Electronics

A recent white paper, jointly published by the Canadian Printable Electronics Industry Association (CPEIA) and the Continental Automated Buildings Association (CABA), examines how printable and flexible electronics can play a role in evolving the function and operation of commercial buildings through new additive manufacturing technology. The paper focuses on the major components of BASs, in addition to lighting, HVAC, and fire & safety. It explores how printed electronics can change building operations and automation systems, enabling improved controls, sensors, and ultimately better conditions for those inside. This paper also examines the degree to which these technologies are ready for development and deployment using the technology readiness levels defined by NASA.

The white paper presents specific example applications where printed electronics can provide disruptive and compelling alternatives to some of the conventional technologies used in the intelligent buildings industry. For example, self-sensing transparent printed organic LEDs (OLEDs) could sense, at the fixture, how much light is needed, putting lighting control at the luminaire for optimal tailored lighting conditions. According to Navigant Research’s OLED Lighting for Residential and Commercial Buildings report, the North American OLED market is set to double in size in the next 10 years. At the same time, printed air quality sensors could provide a better indoor environment to building inhabitants, with cheap printed, embedded sensors being deployed in a rich network in a building.

While investment in these technologies is still needed, printed electronics have the potential to improve the performance of BASs and, in turn, increase the value of commercial space.

 

Why Even Have Meters?

— May 17, 2016

MeterFor as long as utilities have existed, they have created ways to have their customers pay for what they use.  The meter has traditionally been that tool, and many have looked to the newer iteration, the smart meter, as the nexus to enable the next evolution in the way utilities perform. Smart meters have been deployed for water utilities and gas utilities with recent fanfare. Most significantly, smart meters have been deployed by electric utilities, which are using advanced metering infrastructure as a pillar for new programs for a cleaner grid with more efficient use of power. The electric submeter is a part of that plan, enabling a finer grain look at who uses power with a tenant-by-tenant view. But is it time for us to rethink meters? Are they going to be a part of our digital future?  Certainly, we have to keep measuring use—having customers pay for the resources they use is critical, regardless of how low the cost. But with Internet of Things (IoT)-enabled devices, we need to rethink how resource use is reported, whether it be gas, water, or electricity.

A Clearer Picture through IoT

IoT-enabled devices—think cable boxes, commercial HVAC units, large factory machines, and data centers–are already deployed in the marketplace. To date, most of the IoT buzz has been associated with control or information flow, like a building automation system controlling an HVAC unit or a cable company sending over the latest prime time drama. With little modification, IoT-enabled devices can share how much power, gas, or water they are using at the place and time of their use. If all new devices were shipped with this technology, it would be possible to have a clearer picture of how those resources are being used than by using the aggregation tool that is the meter.

Utilities would not want meters to go away. They are a key cornerstone of how they work and, in some cases, are required by law. But as utilities strive to keep pace of the fourth industrial revolution, they may need to rethink how they want to provide better services for their customers. Approaches like circuit-level or plug-level energy reporting are not new, but if the entire electric, gas, or water system was reporting on how much it used in real time, it would provide a much clearer picture of the state of the system. This reporting could also shine a light into how much waste is present due to things like vampire loads or leaking pipes.

We’d need to have permissions and payment mechanisms resolved, and prototypes are already in development for microgrids. We’d need to have assurances that device reporting is reliable and secure, something that has already been proposed though the use of blockchain. The biggest obstacle is our existing infrastructure. At this point, it may not make economic sense to remove or even turn off meters and submeters, even as IoT devices are shipping. But there will be a time in the not-to-distant future where the meter will be viewed as redundant. It may be in a microgrid, or on a university campus.  There will be a tipping point where, for some new commercial, residential, or industrial facility, it will be cheaper to have no meters at all. On that day, we stop using the end of the buggy whip as the prototypical example of obsolesces, and we will instead recall the era of the meter.

 

Why There Are No Self-Driving Commercial Buildings, Part 2

— September 9, 2015

In the previous post, we asked a simple question: If self-driving cars are now just on the horizon for adoption, why are commercial buildings still managed by people? In that post, we addressed the first of three major factors—that buildings age and are not replaced with new technology as rapidly as cars. In this part two, we explore two other factors: the lack of fully integrated systems in buildings and the complex needs of commercial buildings.

Strike Two

A self-driving car is (most simply) an intelligent operator running a single integrated system. While cars, and the related physics, are not simple, the equipment is engineered, designed, and built to operate perfectly from day 1. And the user (the driver) never has to open the hood or have any knowledge of how a car works in order to operate it. Commercial buildings are a different story. A new commercial building may contain over a dozen HVAC, lighting, fire, safety, water, and conveyance (e.g., elevators) systems by a dozen manufacturers. Ideally, the controls of these systems are easy to integrate. Ideally, the connection to the control system is standardized. Ideally, the installers programmed the building correctly. Ideally, the instruction manual for the building is easy to understand. But the ideal is not the norm, as evidenced by the existence of building commissioners. The skilled building whisperers are trained in tuning new and existing buildings, which are notorious for drifting back to undesirable behaviors. In order to be self-driving, a building would have to have all systems ready to run in concert from day 1. This is not going to happen in the near future. Strike two.

Strike Three

The complexity of a building’s performance is not to be overlooked. While an autonomous car has the challenge of navigating and managing a lot of unknowns, such as environmental conditions and traffic on the road, a building has far more daunting challenges. A small office building with 50 offices may have over 100 zones it needs to control, with different usage patterns and tenant needs. In most commercial buildings, people can come in on weekends for an hour; some like their offices bright or hot, others like it dark or cold. There is also no standard limit to how many control points or sensors are needed in a building, and with sensors dropping in price, the data volume associated with buildings is set to rise. Cars can be viewed as one controlled zone moving through a rapidly changing environment; buildings can consist of more than 100 zones, changing consistently over the day, but inconsistently with personal needs. Strike three.

Self-Driving Buildings in Sight

Yet, there are approaches currently in practice that are inching toward a self-driving building. Building automation and building energy management systems are learning to incorporate more data points and better algorithms for improvement through initiatives like Project Haystack. While true building optimization is a goal for the industry, the near-term achievement is more realistic. Commissioned buildings with analytics and automated solutions will lead to improvements in individual systems and result in fewer truck rolls. At the extreme, zero net energy buildings are the pinnacle of high-performance buildings, as they are designed to minimize energy—all systems must work in harmony from day 1. As these advanced buildings and intelligent systems grow in number, the concept of a self-driving building, with no human in the loop, is in sight. However, these advances will be adopted incrementally as building technology ages out. Buildings of the future may indeed be self-driving. But it will take some time, expense, and the coordination of the many stakeholders involved.

 

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