Navigant Research Blog

For Hospitals, a Path to Resilience

— January 27, 2015

My colleague Madeline Bergner recently wrote about efforts to reduce the greenhouse gas emissions from hospitals and other healthcare facilities.  That effort is paralleled by a movement to make these spaces less vulnerable to natural disasters and other disruptions, as well.

In December, President Obama gathered healthcare leaders to announce a set of new recommendations for making the country’s healthcare facilities more climate resilient.  Hurricane Sandy caused over $3 billion in damage to healthcare facilities alone, triggering federal attention to the issue.  At the event, the U.S. Department of Health and Human Services announced a web-based Climate Resilience Toolkit as well as a best-practices guide, “Primary Protection: Enhancing Health Care Resilience for a Changing Climate.”

The guide describes a number of issues that have caused hospitals to lose power during recent disasters.  These include reliance on local infrastructure (namely local [municipal] steam generation), aging infrastructure, and a reliance on onsite diesel generators, which are often poorly maintained and rely on limited fuel supplies.

A Holistic View

The report also cites a challenge in the approach to backup power.  Backup systems are viewed as having no value during normal operations, and therefore “are less likely to attract adequate investment and maintenance from the private sector.”  By viewing backup power as emergency-only, the hospital is viewing power in binary terms; the big diesel generator is there when you need it, and takes up space (and money) when you don’t.

A more holistic view of energy use can lead to a more resilient facility.  The report cites a number of strategies, including the use of combined heat and power, energy efficiency, and passive survivability.  This last concept drives building design and functionality so that hospitals can still function without power.  With operable windows, passive heating and cooling, and naturally ventilated spaces, these levels of resiliency can be accomplished.

Generator Hospital

Navigant Research’s reports on Grid-Tied Energy Storage present a range of technologies that can aid in power management all the time, not just during a crisis.  By viewing grid connectivity as a continuum, facilities can mitigate the effects of disasters and make money by selling power into the grid.  The resilient healthcare facility of the future may not just be one that can survive a disaster but one that provides power to the community 365 days a year.

In upstate New York, the town of Potsdam just announced a microgrid project that will connect 12 facilities using 3 MW of combined heat and power, 2 MW of solar, 2 MW of storage, and 900 kW of hydro-electric generation.  The local hospital is a key stakeholder in this project, led by Clarkson University.  Other partners include General Electric (GE) Global Research and GE Energy Consulting, National Grid, and the National Renewable Energy Laboratory.

Innovative technology is not only being deployed for the entire hospital facility.  At the Texas Scottish Rite Hospital for Children in Dallas, Texas, flywheel manufacturer Vycon installed two 300 kW flywheel systems just to power the imaging facility.  The benefits of flywheels include high reliability, power density, and overall quality, as well as the quiet nature of backup power.  While the hospital has only suffered a few power outages in recent decades, the protection of the expensive equipment from power spikes and voltage drops is of great value.

 

How Technology Partnerships Will Shape the Future of Building Innovation

— January 20, 2015

The last 5 years have been monumental for the smart buildings industry.  Major building automation vendors have repositioned themselves as tech companies, a flurry of startups have entered the market, and building owners have become increasingly aware of the business value of integrating energy and operations management technologies.  Navigant Research expects to see a shift from the rash of acquisitions that dominated the smart buildings news a few years ago to partnerships shaping the market’s near future.  Companies are coming together to help customers overcome the challenges of enterprise awareness and integration and to make energy service offerings even smarter.

Enterprise Awareness

Even as the economy improves, many customers resist investing in energy efficiency.  The upfront capital costs of systems integration and equipment upgrades can be a daunting proposition for building owners and managers still learning the business value of intelligent energy and operational management.  Yet, a growing number of startups are finding new ways to bring cost-effective solutions to market that will help deepen the market penetration of smart building technologies.

In August, for example, Panoramic Power and Lucid announced a partnership to help customers capitalize on enterprise efficiencies through wireless energy monitoring and analytics.  Panoramic Power’s self-powered micro-sensors and Lucid’s BuildingOS software help customers aggregate building data and generate useful data across diverse systems and facilities.  In October, GridPoint and MicroStrategy announced a new partnership to enhance the software platform and visualization capabilities of GridPoint Energy Manager for cost-effective insight across light commercial building portfolios.  These two examples epitomize the partnering activity in the market that’s helping customers realize the benefits of smart building technologies at lower costs.

Enhanced Energy Services

Energy and engineering service companies are also seeing the benefits of partnering to bring smart building technologies to their customers.  AtSite is now enhancing its smart building professional services with the BuildingIQ Predictive Energy Optimization software.  The collaboration converges cloud-based software analytics with engineering expertise to elevate the service offerings to their customers.  ForceField Energy has partnered with Noveda to enhance its energy service company (ESCO) offerings with the IntelliNET Luminaire Management System (LMS) offering.  These partnerships illustrate how smart building technologies can generate new efficiencies and insights for professional service providers and differentiate offerings to customers who increasingly demand data-driven decision support.

Navigant Research will continue to track how new partnership models unfold in 2015 and whether these companies can successfully utilize their individual core competencies to deepen market penetration and expand the market for smart building technologies.

 

The Geopolitics of Energy Efficiency

— January 15, 2015

The crisis in Ukraine has put the country’s energy security at risk.  Among other threats to the country’s economic stability, natural gas supply is a lingering concern.  In December, Naftogaz, Ukraine’s state-owned gas company, managed to settle the $3.1 billion debt it owed to Russia’s Gazprom, averting the risk of gas supply being shut down.  Longer term, there’s a little-noticed solution: Investing in energy efficiency could help Ukraine avoid importing any gas from Russia.

According to the International Energy Agency, Ukraine’s energy intensity is nearly 3 times greater than the average for Organisation for Economic Co-operation and Development (OECD) countries and 25% greater than the average for non-OECD European and Eurasian countries.  Energy efficiency has not been a priority in the former Soviet republics.  Subsidies provided by the gas monopoly that were designed to keep the populace complacent also created a disincentive to upgrade Soviet-era equipment and controls.

After the Fall

After the fall of the Berlin Wall, many of the same problems plaguing Ukraine were faced by East Germans.  But, since reunification, hundreds of buildings with poor thermal characteristics in East Germany have been demolished and replaced with more efficient ones.  Additionally, in the buildings that remain, major upgrades were made to the thermal envelope and heating systems were replaced.  As a result, total energy use in Germany fell between 1996 and 2008.

To be sure, some modernization projects are happening in Ukraine.  In Odessa, upgrades to a district heating network provided total energy savings of 50%.  But antiquated heating systems in Ukraine suffer from years of neglected maintenance.  In addition to the equipment, heating controls are an issue.  Many systems only have basic on-off control, they are either heating at full blast or are off – a terribly wasteful limitation.    Easy efficiency investment opportunities with short paybacks are abundant in Ukraine.  But, as with many energy efficiency investments, financing is the hurdle.  The problem is especially acute in Ukraine, as loans from the International Monetary Fund are keeping the country afloat.

Future of Financing

Worldwide, major changes in financing options seem to be in store for 2015, aimed at lowering the cash needed for energy efficient investments.  By converting upfront capital investments into operating savings through innovative finance, more projects will get the green light.  To date, energy service companies (ESCOs) have served as the primary means of outside funding for energy efficiency improvement projects.  But new approaches, such as independent energy savings insurance products, are beginning to emerge.  Currently, private real estate fund managers have $110 billion of equity available for investment, an all-time high.  As the situation in Ukraine demonstrated, there are abundant opportunities for investment being overlooked.  The changing world of energy efficiency financing appears to be the clearest way to bridge that gap.

 

Variable Refrigerant Systems Set to Grow in 2015

— January 14, 2015

This could be a watershed year for variable refrigerant flow (VRF) systems in the United States.  Although it has constituted only a small fraction of the overall heating, ventilation, and air conditioning (HVAC) market since its U.S. debut in 2003, the technology continues to gain traction.  The VRF approach varies from traditional commercial chilled water or rooftop unit systems because it uses refrigerant to transfer heat in a building.  The first advantage of this system is that the pipes are smaller.  Because the refrigerant changes phase, less of it is needed to transfer a set amount of heat when compared to chilled water.  VRF systems are also more efficient, since VRF compressors are inverter-driven and can operate at variable speeds.  As a result, they are much more efficient in part-load conditions than the compressors in chillers or rooftop units.

Competitive Landscape

Companies in the U.S. HVAC industry appear to be positioning themselves for a growing 2015 VRF market.  Johnson Controls, for instance, announced in 2014 a joint venture with Hitachi to incorporate Hitachi’s VRF and inverter technology in Johnson Controls’ U.S. solutions portfolio.  But the deal may not be completed until the first half of 2015.  Also in 2014, Samsung Electronics America, Inc. agreed to acquire Quietside Corp., the North American distributor for Samsung’s HVAC products since 1997.  The move marks Samsung’s focus on building the U.S. market for ductless and VRF products.  Meanwhile, Trane further expanded its portfolio of VRF products through the addition of a water-source VRF system.

Competition Ahead

VRF systems are more efficient than conventional HVAC systems and have promising U.S. market potential for 2015.  But they may ultimately not be the best means of increasing efficiency and comfort.  Indeed, geothermal heat pumps (examined in detail in Navigant Research’s Geothermal Heat Pumps report) may be more efficient than VRF.

During the 2008 renovation of its headquarters, ASHRAE established the building as a living lab to evaluate new technologies.  A portion of the project included installing a VRF system in part of the building and a geothermal heat pump in another part of the building.  The results of a 2-year study of energy consumption indicate that the geothermal heat pump was more efficient than even the VRF system.  Moreover, geothermal heat pumps are more similar to conventional systems than VRF systems are.  They don’t entail the same changes in required installation skills, system design, and architecture.

Though a study of a single building in a single climate zone may not be rigorous enough to provide substantial conclusions, it certainly indicates that competing technologies, including both VRF and geothermal heat pumps, have a bright future.

 

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