Navigant Research Blog

IoT: Building Awareness – Part II

— January 4, 2018

Today’s facility managers are faced with the challenge of assessing performance while trying to sift through endless streams of data. People want better data, not just more, as constant flows of information can sometimes muddy the waters for decision makers. The integration of various subsystems in building automation further deepens this web of connectivity, which is why commercial buildings today are looking to smart building technology as a way to better facilitate and manage system operations. Knowing how a system operates is imperative to business development and economic growth. Thus, companies are starting to focus on the primary element of those systems: building occupants.

Stand Out from the Pack

As “IoT: Building Awareness – Part I” explained, the Internet of Things (IoT) has had a significant impact on intelligent building designs. The increased sophistication of smart technology has created a more competitive business market, making it difficult for companies to outperform their competitors. As intelligent building systems become better at adopting the latest technologies and connectivity strategies, the challenge for businesses becomes knowing how to leverage their competitive advantage. Focusing on occupant satisfaction may give companies the leg up they need in a market where customer loyalty and employee retention is becoming a major challenge. This may also be beneficial from a branding perspective, as the growth in IoT services has made it difficult for companies to differentiate themselves in a world of streamlined automation. Focusing on occupant satisfaction takes a more holistic approach to facility management by helping businesses and employees—and the buildings they occupy—become more efficient through enhanced decision-making capabilities.

Management 101

You can’t improve a system without knowing how it operates. News of partnerships like the one between Lucid and Cushman & Wakefield are becoming more mainstream as businesses look to advanced software solutions and intelligent integration for understanding performance operations. Advanced sensors and data analytics that track tenant behavior provide valuable information into system operations and allow facility managers to make better decisions on how to upgrade their offerings. This is important from an efficiency standpoint because it helps managers understand where areas may be underperforming, why, and how to address those issues. For example, building owners can cut down on utility costs if they know which rooms will require less heating or cooling based on the number and location of occupants.

It’s a Win-Win

Businesses and employees also stand to benefit from this comprehensive approach, as various studies stress the relationship between comfort level and worker efficiency. Researchers at the University of Warwick’s Department of Economics reveal causal relations between employee well-being and company performance. This study, along with several others, shows that employees are happier and more engaged in areas where they feel comfortable and can be more productive. Facilitating occupant satisfaction can also strengthen employee retention as happier employees are more likely to succeed in their careers. These findings are important for business owners justifying investments toward creating amicable office environments through smart building technology.

 

New Opportunities in the Urban Energy Cloud

— January 2, 2018

The importance of cities to meeting global climate targets is undisputed. Since the COP21 Paris Agreement, more and more cities are joining early leaders like Copenhagen and Stockholm in pledging to become carbon neutral cities. Boston and London, for example, have both recently announced the goal of becoming zero carbon cities by 2050. To achieve such ambitious goals, cities will need to have implemented major changes to their energy systems by 2030. And given the speed of urban planning processes and infrastructure programs, cities and their partners need to instigate many of these projects within the next 3-5 years.

This transformation will touch every aspect of city services and infrastructure, including energy generation and distribution, heating and cooling systems, building energy efficiency, transportation, water and waste management, and the efficiency of city services such as street lighting. At the same time, city operations are being transformed by digital technologies such as the Internet of Things (IoT), smart buildings, artificial intelligence, robotics, and automated vehicles.

A new Navigant white paper, Navigating the Urban Energy Transformation, looks at the critical elements of the emerging city energy landscape and the intersection with the radical changes that Navigant characterizes as the Energy Cloud. As the City of Madison is showing, the transformation of the energy sector provides the bedrock for the creation of the low carbon cities of the future. This convergence of urban innovation and the energy transformation makes smart cities one of the key combinatorial platforms for the Energy Cloud.

The opportunities this creates for utilities and other energy sector plays is particularly evident in the building and transport sectors. A zero carbon city will need to address the role of fossil fuels in space heating and in transportation. Improvements in energy efficiency and the shift to renewable resources are essential steps but, more profoundly, the much closer connection between buildings and transportation and the energy grid will lay the foundation for a new Urban Energy Cloud:

  • Building in the Energy Cloud: The extension of building systems from standalone applications focused on the operation of a single building to hubs within a wider network of energy and environmental monitoring systems will be one of the most dramatic changes in the technical infrastructure of the city. Navigant Research estimates that only 0.5% of the commercial building stock globally is actively participating in the energy system today, but by 2026, more than 9% will be involved. This development will create new roles and opportunities for all players in the sector, including utilities.
  • The age of low carbon mobility: The decarbonization of urban transportation fleets is also offering many opportunities for utilities. EVs will be the single largest addition of energy demand to the power grid in many nations of the developed world. By 2020, more than 4,000 GWh of electricity will be consumed by plug-in EVs annually in the US alone. New services are already combining EVs with stationary storage and other renewable energy offerings to optimize regional supply and demand. The smart charging of swarms of managed EVs will enable greater concentrations of rooftop solar, as charging will be staggered outside of peak times and will be matched to distributed generation.

The city of 2030 will need to manage a much more complex set of interdependencies between diverse aspects of city operations, infrastructure, and platforms. This requires new networks for collaboration between cities, utilities, and other energy sector players, as well as transportation providers, building owners, telecommunication companies, and technology suppliers. Navigant Research estimates that this will create a market worth more than $1.5 trillion over the next decade for smart services across urban energy, buildings, mobility, and other city operations.

 

Amazon’s Key Service Echoes Growing Concerns Over Privacy and Security

— January 2, 2018

Amazon’s latest service innovation has raised questions about how far the boundaries of technology can be pushed to make consumers’ lives more convenient. The Amazon Key delivery service, along with the Amazon Cloud Cam and a compatible smart lock, allow users to grant access for in-home deliveries. The service solves issues around package theft and customer availability to receive a package. It works by sending the user a 4-hour window on the day of delivery and confirming the assigned courier is at the correct address at the intended time by scanning the package barcode. When the package is scanned, the user receives a notification of the imminent delivery, the Cloud Cam is activated, the door unlocks, and the user can watch the delivery in real-time or check back later to ensure the delivery went well. The service was made available in 37 cities for tens of millions of items in November 2017. This sounds simple and straightforward, but media and industry specialists are scrutinizing the limits this service approaches by letting strangers into people’s homes. And to be fair, there are already issues with it, including a flaw that allows couriers to disable the security camera and door lock (which Amazon has promised it will fix).

Can Security Solutions Tamper Concerns?  

This new service is one among many offerings in the residential sector that emphasizes growing concerns over consumer privacy and security. From the common belief that our beloved social media sites are spying on users to publicized hacks of big name brands resulting in leaked personal data, consumers are increasingly wary as technology becomes a more intimate part of their lives. Stakeholders across the value chain recognize the need to implement more robust security solutions, and new regulations that aim to protect consumer data are emerging, such as the General Data Protection Regulation (GDPR). But for many, cybersecurity is only starting to become a priority, and companies are still figuring out how to deal with growing threats.

Threats of Scale

Data privacy and security become especially complex in the consumer electronics world because the home is a sanctuary and should be private and secure. At the same time, the hacking of a Wi-Fi router has much lower stakes than the hacking of a power plant and can be considered less of a priority for investment in security. Manufacturers promise data privacy and secure devices, but customer sentiment does not always resonate with these assurances. There is also the question of responsibility and whether the manufacturer, chip provider, wireless protocol alliance, or the consumer should be held responsible for security and data privacy. Consumers want to partake in social media, adopt smart home devices, and lead more convenient lives, but don’t want to feel like they are being watched, listened to, or followed, and they don’t always understand the risks associated with using technologies (such as the collection and sales of personal data).

Convenience vs. Safety

Privacy and security are increasingly affecting consumers at home. Residential customers are skeptical of technologies that have the potential to compromise privacy and security, which is affecting market growth. In order to progress the Internet of Things in the home, it is important for stakeholders in the residential space to be transparent with users about the measures they take to ensure the security of devices, software, services, and data privacy.

 

Sustainability as a Business Model

— December 12, 2017

Energy efficiency and emissions goals form an important piece of sustainability initiatives for many corporations and other professional entities. Sustainability is often solely associated with energy and climate-related metrics, but it is not the only factor contributing to a sustainable organization. Investors are starting to recognize what a sustainability-focused business approach can mean for long-term organizational success. Increasingly, sustainability performance (or environmental and social governance) is being defined more broadly to include social issues such as education, injustice, and poverty.

UN Sustainable Development Goals

In 2015, the UN launched the 2030 Agenda for Sustainable Development with the support of 193 nations. This agenda includes a set of 17 sustainable development goals (SDGs) and 169 targets that came into effect in January 2016. The purpose of the SDGs is to create standards that can measure progress on key issues like combating poverty, climate change, and injustice—among others. The UN agenda is designed to create an economic environment where the deployment of capital resources is considered in terms of economic, social, and environmental criteria. SDGs foster a discussion on investment quality beyond just the expected financials.

Socially Responsible Investment: A Growing Track Record of Outperformance       

Socially responsible investing may have begun in the 1700s with the Quakers, who refused to support “sinful” businesses such as tobacco, firearms, and the slave trade. More recently, sustainable investing has taken on the guise of promoting environmentally sustainable businesses, although financial performance is at the fore. The Morgan Stanley Institute for Sustainable Investing performed a study on over 10,000 sustainable equity funds that found that these investments have met or exceeded the performance of comparable traditional investments. UBS, a leading global investment bank, claims to have $970 billion, or 35% of its investable portfolio, placed in socially conscious investments. Al Gore’s sustainability-focused private investment fund, Generation Investment Management (GIM), has returned about 16.3% after fees since September 2014, while the MSCI World Index has returned 7.7% over the same period. Assessing the sustainability of companies can be done using the Dow Jones Sustainability Indices, which are a group of benchmarks that track the stock performance of companies in terms of economic, environmental, and social criteria.

The Foundation of High Performing Companies

Why do sustainable companies often outperform their peers? For Gore and GIM, not only is sustainability good for humanity, it is also a significant indicator of investment risk, management integrity and quality, robustness of business models, and products and services that are aligned with real-world problems and needs. Put together, these characteristics can identify high performing companies that provide consistent returns. An interesting note about GIM and its investment thesis is that it has broadened the scope of the definition of sustainability to include company diversity, human resources practices, community interaction, employee benefits, healthcare, and the values and ethics of the C-suite—along with the usual energy- and climate-related strategies. Each sustainable investment decision is aimed at choosing the factors that are most important to the sector where the company competes.

Many companies that use Navigant’s Energy research and services deliver energy-related products and services that can help their own customers meet sustainability goals. However, energy and emissions are only a small component of sustainable participation in the global economy. Similar to the dramatic efficiency results that can be achieved with a holistic approach to commercial building energy management, corporate sustainability efforts—and often business performance—can be dramatically improved with a more holistic view of what sustainable business performance means and how it can be achieved. There do not have to be any tradeoffs, and the real-world results are starting to speak for themselves.

 

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