Navigant Research Blog

There Is No Cookie-Cutter Approach to Energy Efficiency

— January 11, 2017

Energy efficiency is a resource available in abundance, no matter the location. It is the lowest cost option of energy investment, beating all other forms of generation. But if energy efficiency is so beneficial, why is its implementation not standardized across platforms or locations in some form or fashion? Can’t similar measures be prescribed for all buildings, old and new? Is it possible to take a boilerplate project and implement that across all buildings to gain the present efficiencies? For example: Fix these components, install this equipment, follow this process, and you’ll have an efficient building. Sounds simple, right?

It may not be that easy. There are so many variables to an energy efficiency project or engagement that one prescribed set of technologies, process improvements, or maintenance services will not be optimal across all buildings in general.

One size does not fit all. The profile of the end-use consumption of standard building components is dramatically different in cold climates versus moderate to warm climates. So, when analyzing a building for an efficiency project, all of these factors—and many, many more—must be taken into consideration.

Transition to Sustainable Buildings, Strategies and Opportunities to 2050

(Source: International Energy Agency, 2013)

Efficiency performance requirements, codes, and standards have been proven to work as prescriptive guidance for both new construction and retrofits. Defining these locally is important for the same reasons that each efficiency project is unique. For example, heating codes may not be as important or effective in a warm climate as in a cold climate.

There is still a long way to go until the value of energy efficiency is maximized around the world. A full 70% of global energy consumption is not covered by any energy efficiency performance requirement. This is despite the fact that the International Energy Agency found that performance measures are the most effective action to take in the optimal pathway to a decarbonized energy system. The good news is that, although most projects are unique to a situation or location, energy efficiency experience can be transferred to other groups, countries, and regions. The diversity of experience created by project uniqueness adds to this body of knowledge, making energy efficiency accessible anywhere and for any application.

 

Meeting Global Challenges with Energy Efficiency

— January 9, 2017

Energy CloudAccording to the International Energy Agency (IEA), efficiency is the only energy resource that all nations possess in abundance. Similar to other resources, energy efficiency must be mined. Not from the ground per se, but by examining the available opportunities and by implementing a holistic plan that looks at methods and actions appropriate for the locale, climate, population, demographics, and a host of other interrelated inputs.

According to the IEA’s World Energy Outlook 2013, every $1 invested in efficiency saves $2 in new power plants and electricity distribution costs. Globally, buildings are responsible for nearly 40% of energy use (including 60% of electricity use), 12% of water use, 40% of waste generated by volume, and 40% of material resources. This vast amount of resource consumption provides a significant opportunity that amounts to more than mere cost reductions for building owners, managers, and tenants. Energy efficiency competes on price with the cheapest of energy generation technologies.

Example End Use Consumption of Standard Building Components in Different Climate Zones

(Source: American Council for an Energy-Efficient Economy)

This value has consistently held up over time, making it a stable and relatively predictable alternative to new generation sources of any kind. Overall, investments in energy efficiency enable more effective capital utilization to help meet difficult global challenges such as accelerating urbanization, climate change, national energy security, energy access, and worker productivity, to name just a few.

Opportunities in Buildings Efficiency

Navigant Research’s 2015 Global Building Stock Database report noted that residential and commercial global building stock was expected to reach 160 billion square meters in 2016. There are many opportunities to expand and extend the value of this resource, and the world is making progress. Gross domestic product and population growth has been largely decoupled from the demand for energy, the energy intensity of nations has decreased, and energy efficiency policies covered 30% of energy consumption (up from 11% in 2000). All this has happened despite the fact that oil prices fell as much as 60% in 2014.

Overall, progress continues to be made on efficiency gains in developed and developing nations, and regional and country specific momentum may be strong enough to withstand the temporary political climates that could serve as a hindrance.

 

HVAC Vendors Providing More Than Just Heating and Cooling

— January 5, 2017

Heating, ventilation, and air conditioning (HVAC) controls represent a critical part of building energy management, as they are often the single biggest users of building energy. A recent article posted on Energy Manager Today states that “[Companies] within [the HVAC Industry] are unanimously eager to learn and grow in continual pursuit of advanced levels of efficient operation.” While the ultimate measure of success for global energy managers is the amount of energy saved, supporting industry sectors such as lighting and HVAC provide the actual tools to help them realize their targets.

In the HVAC industry in particular, leading vendors such as Trane and Carrier are redefining what it means to provide a supporting role to global energy managers. Similar to other industries where digitization has enabled a more detailed understanding of energy consumption, these leading vendors are finally realizing the value locked within their extensive building relationships and the knowledge they have gained working in buildings for many decades. Both Trane and Carrier have quietly developed highly capable building energy management systems that rival other leading offerings in the market.

Digitization Driving Progress

Data and software capabilities are the key drivers here. The expanded software capabilities built into newer controllers give these HVAC vendors the ability to transform their knowledge of cooling and heating into new, holistic optimization strategies for the operation of their equipment in conjunction with other critical building systems. The good news is that even though some of these offerings were years in the making, the advancements are still in the earliest stages of development. As additional data and experience are gained with these systems and new working relationships, the results are expected to be even more dramatic.

As described in Navigant Research’s recent Leaderboard Report: Commercial HVAC Systems, Trane and Carrier have evolved digital offerings that help to understand, integrate, and coordinate disparate building systems, allowing for improved efficiency and lower lifecycle costs. Similar to leading website and Internet commerce companies that tout page views as a measure of their value, Trane and Carrier have realized and begun to exploit the value locked in their existing customer bases and vast knowledge of building operations to help move the HVAC industry into the digital age.

 

Defining Companies in the Digital Age

— December 15, 2016

Intelligent BuildingAs I mentioned in a previous blog, a company that does not have some form of automation or intelligence in its commercial building efficiency product or service will have little chance to compete in the changing market landscape. That’s a pretty strong statement, and maybe one that not everyone agrees with. It seems to be the direction that macro market trends are moving, however, and there are plenty of examples to back it up.

One of the most compelling observations about the changing face of automation and intelligence was made in a keynote address by Jeffrey Immelt, Chairman and CEO of General Electric (GE), at the Intelligent Platforms User Summit back in 2014. The comment he used to frame his speech was, “If you went to bed last night as an industrial company, you’re going to wake up this morning as a software and analytics company.”

Long Road to Change

This is easier said than done, and GE knows it. The company has been working on this strategy for over 5 years and through $1 billion in investment, and it is still not yet fully transformed. But this shift is the company’s goal. GE’s software business is growing 20% per year with a goal of $15 billion in revenue by 2020, a benchmark which would make the company a top 10 software player.

Not every participant in the field will end up as a software company; each must follow their own strengths and strategy. But it is imperative to build some form of internal capabilities to meet the demands of a new digital world. Each company has intellectual property (IP) that can only be completely understood and translated by internal resources that have boots on the ground. The job won’t get done with a software supplier or a software integrator alone. And who would trust this critical strategy solely to outsiders anyway?

The main point of my previous blog was that developing these types of intelligence and automation capabilities will not happen overnight, even by acquisition. Companies that did not have the foresight to start assessing the digital transformation years ago will be in serious catch-up mode in the years to come.

 

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