Cleantech Market Intelligence
Reconnecting Buildings to the Grid
That headline isn’t meant to be a joke. Of course, buildings are connected to the grid, which supplies over three-quarters of the energy consumed to operate buildings (with natural gas consumed onsite representing the majority of non-grid energy consumption).
But I’m not talking about yesterday’s unidirectional grid architecture, in which utilities build the capacity needed to meet energy demand no matter how much it soars. (And indeed it is soaring, with peak load in places like Texas growing by almost 20% over the next decade.) I’m talking about the next-generation grid, on which buildings will become increasingly flexible, dynamic assets that will help utilities reduce the billions of dollars they spend on building new power plants and transmission and distribution infrastructure every year (in the United States alone, the electric power industry spends $80 billion annually on infrastructure).
How can buildings reduce these costly investments, which are passed on to ratepayers in the form of electricity price increases? The answers stem from the growing intelligence of the control systems that govern energy consumption by heating, cooling, and lighting systems, and plug loads. Even today, many of the systems used to control buildings – particularly smaller buildings and older buildings – aren’t digital, so remote control is virtually impossible. The good news, however, is that the global market for commercial building automation systems is on the rise, growing from $73 billion in 2012 to $146 billion by 2020 as noted in Navigant Research’s report, Commercial Building Automation Systems.
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With this increased digital infrastructure in place, the opportunities for controlling building systems in dynamic response to the broader grid conditions are nearly unlimited. The earliest foray into building-to-grid connections to date has been through demand response technology, which enables utilities send a signal to facility managers to reduce energy consumption during incidents like peak load events and generation shortage emergencies. The process of dispatching these demand response resources, however, is manual in many cases, with signals often sent via fax or pager (yes, even in 2013), limiting buildings’ ability to ease many real-time grid burdens.
Automated demand response, promoted by industry groups such as the OpenADR Alliance, aims to improve on the current demand response status quo by connecting utilities not just to buildings but specifically to the automation systems inside them, enabling faster and more reliable load reductions in many cases. In the long term, this two-way connection will allow buildings to participate increasingly in ancillary services programs, which electricity suppliers pay billions to maintain in the case of major imbalances between supply and demand. And, with more powerful connections between utilities and building systems, buildings will also be able to play a direct role in integrating the thousands of MW of intermittent renewable energy sources, like wind and solar, added to the grid each year.
The utilities are not the only ones to benefit. Building owners can generate thousands of dollars in revenue for shedding load, a reward for their contribution to avoiding billions of dollars in electric power investments. This emerging business model is catching the eye of utilities and building owners alike, so we expect to see continued innovation in the building-to-grid connection as digital control systems grow.