Navigant Research Blog

IoT – A New Source of Competitive Advantage in Commercial Real Estate

— August 29, 2017

Whatever business you are operating inside a commercial building, if you aren’t collecting, storing, using, and learning from data, then you are not doing your job. That is the sentiment in today’s intelligent buildings market. Commercial real estate faces this reality as the effective use of data, analytics, and Internet of Things (IoT) becomes a competitive advantage. The use of all these tools can maximize occupancy, amplify tenant satisfaction, and even attract and retain employees.

Intelligent building solutions entered the market as tools to improve specific facility systems—HVAC, lighting, and physical security—and it started with connecting devices. Once the devices were connected, the next step was collecting data and analyzing it to be communicated visually. These intelligent building technologies improved the operations of equipment and demonstrated value through the lens of energy efficiency. What makes IoT unique is the ability to unify and process data at the enterprise level, which has been the vision of the intelligent buildings market. IoT enables more cost-effective data acquisition, aggregation, communication, analysis, and ultimately, performance improvement.

Capitalizing on IoT for Fully Occupied, High Value Commercial Real Estate

Journalist Oliver Burkeman wrote in 2009, “Without most of us quite noticing when it happened, the web went from being a strange new curiosity to a background condition of everyday life.” Today, we are entering the next era in which uninterrupted access to data from our mobile phones and wearables to legacy building systems can create a seamless data profile of an enterprise portfolio of facilities to redefine the occupant’s experience, create new productivity for operations and service providers, and create more value for building owners. A holistic, data-driven approach to real estate management is critical as we look into the future of workspaces.

The US Bureau of Labor Statistics estimates that today’s students will have 8-10 jobs by the time they are 38. Furthermore, the agency estimates that by 2020, 50% of the workforce in the United States will consist of freelancers. What this means is that the demand and use of commercial office space will look completely different than it does today. Technology and an IoT approach to facility optimization can help real estate owners differentiate their buildings to win the competition for tenants and even employees.

What is the process to move the real estate industry toward the digital office of the future? How can IoT deliver cost savings, sustainability, and customer satisfaction? Join us on September 12 at 2 p.m. EDT for an Intel-sponsored Navigant Research webinar. We’ll explore how Rudin Management is working with Intel and Prescriptive Data to demonstrate how IoT can optimize the occupant experience in the commercial office.

 

Taking VPPs to the Next Level

— June 20, 2017

The primary goal of a virtual power plant (VPP) is to achieve the greatest possible profit for asset owners—such as a resident with rooftop solar PV coupled with batteries—while maintaining the proper balance of the electricity grid at the lowest possible economic and environmental cost.

The purpose is clear, but getting to this nirvana is not easy. Nevertheless, there are clear signs that the VPP market is maturing. New partnerships are pointing the way for control software platforms that can manage distributed energy resources (DER) in creative ways.

Creating a DERMS for Utilities

Case in point: the recent collaboration between Enbala Power Networks and ABB to create a DER management system (DERMS) platform for utilities. Underpinning this foray into smarter DER controls is the following statistic: more distributed generation (DG) will be coming online in 2017 than traditional centralized generation (coal, natural gas, and nuclear power plants). By 2026, 3 times as much DG will be coming online and sending power into the grid than these traditional centralized power plants. That gap will only widen more over time.

Annual Installed Centralized vs. Distributed Power Capacity, World Markets: 2017-2026

(Source: Navigant Research)

The entire ecosystem of DER, including DG, will need to be managed in new ways if value is to be shared between diverse asset owners and the incumbent utility grid. Utilities are slowly coming to see this as an opportunity rather than a threat. Consider these survey results from January of this year, with over 100 utilities responding. 18% of respondents indicated that they already had a DERMS in place, while 77% said they planned to implement their own DERMS program within the next 36 months. These responses show a majority of utilities today anticipate needing to implement DER control solutions in the near future.

There are many innovators in the VPP space, including Enbala. Along with its new partnership with Swiss industrial grid powerhouse ABB, the company’s recent expansion of its controls and optimization architecture leveraging recent advances in machine learning are helping to push the VPP platform into the mainstream. In the process, Enbala is providing metrics that suggest a promising ROI for VPPs.

Cost of Traditional Power Plants versus VPPs

Here’s a quick comparison. According to the US Energy Information Administration, the cost of building a new coal power plant is approximately $3 million/MW. This capital outlay does not consider the risk of future environmental regulation that may occur over the 20- to 30-year life of the project. While the cost of a new natural gas-fired power plant is much less—approximately $900/MW—that cost still represents a potential future liability. In comparison, the cost per megawatt for a VPP that takes advantage of the diverse set of existing DER assets is approximately $80/MW. Furthermore, the investment in the software and supporting IT infrastructure that creates the VPP does not carry either environmental liability or the risk of stranded investment. The VPP value can only increase over time as new markets emerge for grid services.

In the final analysis, VPPs optimized by smart software controls and new innovative business models such as transactive energy are key to realizing a vision of the future that Navigant has deemed as the Energy Cloud. To learn more, check out the new white paper developed by Navigant Research for Enbala and look for details about the forthcoming webinar on August 15.

 

Clearing the Data Hurdle for Effective Asset Performance Management

— June 9, 2017

Few in the utility industry today disagree with the notion that technical advances in terms of sensing and analytics are yielding powerful new solutions for asset performance management (APM) and predictive maintenance. Many would also agree, however, that there are challenges for utilities ready to digitize their asset management program. Indeed, finding, consolidating, mapping, cleansing, and storing the data from a multitude of sources can seem like a daunting challenge.

Best practices are emerging as major utilities take the APM plunge, and meaningful benefits to holistic APM strategies are now clear. One transmission operator, for example, has avoided five major transformer failures since the implementation of its APM program—and said that “just one or two saves paid for the system.”

With growing emphasis on reliability from regulators, aging infrastructure, and accelerating workforce retirement at utilities, the need for a utilitywide APM program has never been greater. Understanding the data challenges utilities are likely to face is an important first step to putting a plan in place.

Who, What, Where, When, and Why?

When preparing to deploy an APM solution, the five Ws should be asked in the context of company assets and data:

  • Who: Which operating divisions house data needed for the desired analytics? What institutional knowledge is held by which actors? How can it be incorporated into the APM system for preservation? How do IT and operational personnel coordinate efforts?
  • What: What datasets exist today? In what format? Electronic or paper-based? Is the data accuracy good? Is it verifiable? Are there new datasets that need to be developed?
  • Where: Where has asset data historically been housed? Where should it be stored going forward? Do I need a data lake? Can I store my data in the cloud? How should the transition be orchestrated? Is there data available in the field that is not communicated to the operations center? Should asset analytics be performed centrally or in the field?
  • When: How often should asset data be updated? Is there connectivity to the asset, allowing for real-time or on-demand reads?
  • Why: For what applications do I need this data? For what applications might I want the data in the future? What are my primary goals for the APM system—reducing maintenance expenses with proactive repairs and replacements? Reducing outage frequency/duration? Shoring up grid stability where solar penetration is high and growing? All of the above?

As the APM planning team drills down into each of these questions, new questions will become apparent. Testing and validation of analytics algorithms must be thorough and must be completed on an ongoing basis—rather than one and done. As new data becomes available, adjustments may be needed due to previously unforeseen situations.

Is It Worth It?

It’s still early days in the APM world, but clear benefits have been reported by utilities that have done pilots or full-scale deployments. As more utilities invest in APM solutions, it seems likely that the benefits—in terms of avoiding unnecessary repairs, preventing outages, averting capital investment, and efficiently managing field crews—will become apparent. New applications that can be created with a robust, agile APM platform and complete, quality datasets will also emerge.

Join the Webinar

If you’d like to learn more about the nitty gritty details of the APM world, attend the Navigant Research webinar, The Digital Future of Asset Performance Management. Join me, ABB’s Matthew Zafuto, and FirstEnergy’s Dana Parshall for an interactive discussion of the data challenges and lessons learned in FirstEnergy’s implementation of ABB’s Asset Health Center solution.

 

Technology and Buildings – A Solid Foundation for Sustainability

— June 6, 2017

The idea of corporate sustainability risks becoming a business paradox—a symbol of commitments without funding or substance that, in themselves, become unsustainable. However, political uncertainty, understanding of climate risk, and shareholder demands are redefining corporate sustainability strategies. Technology innovation has set the groundwork for a transformation of sustainability strategy, and intelligent buildings are a perfect starting point.

#1: Business Response to Political Uncertainty and Climate Risk Awareness

In early May, a full page ad campaign in The New York Times, The Wall Street Journal, and the New York Post made a call to President Donald Trump to commit to the Paris Agreement. The signatories, 24 companies with a market cap of over $3.2 trillion, proclaimed that US leadership on climate change would strengthen the country’s economic competitiveness, create jobs, and reduce business risks. Uncertainty is bad for business, and a unified approach to study, combat, and adapt to climate change is an imperative for the economy.

#2: Shareholder Demands

Ceres convenes institutional investors for climate change education and advocacy. Climate change risk disclosure is a major focus area, and the group tracks shareholder resolutions that demand portfolio resilience analysis. Ceres cites the resolutions filed at 15 major fossil fuel companies as one line of evidence that shareholders demand climate change preparedness and investment in mitigation. Along the same lines as #1, shareholders see uncertainty as bad for their investments, and with more unity, major investors are demanding action and planning on climate change.

Start with Intelligent Buildings

On May 4, I moderated Energy Efficiency in Buildings – Technology Helping to Set New Benchmarks, a webinar for Realcomm. The roundtable discussion and results of real-time polling support the argument that technology can provide measurable improvements on sustainability and tie to climate change commitments.

A question to the audience highlighted the confusing state of branding and opinions around sustainability. The audience was asked, “Would you rather your company be considered ‘green’ or ‘efficient’ by your customer base?” The results were striking: 80% chose “efficient,” while only 20% chose “green.” This result underscores the challenges companies have faced with sustainability initiatives that failed to rely on technology or reflected measurements in time rather than ongoing improvements.

John Seaton, director at RealFoundations, helped illustrate how technology can deliver bottom-line benefits and change the face of sustainability. In two case studies, RealFoundations identified significant energy and associated cost savings with data analytics in 4-star ($20,000 energy savings) and 5-star ($10,000) NABERS Energy (the Australian equivalent to LEED) scored buildings. This evidence sets the stage for how technology can amplify the benefits of sustainability commitments.

There is power in aligning technology and sustainability. An intelligent building is defined by a data infrastructure for ongoing monitoring and operational changes. Once a commercial building has the IT backbone for capturing detailed data on a continuous basis, there is a platform for systemic change that can deliver sustainability benefits while supporting the bottom line. The dataset is the input and the output is a near endless array of business metrics—utility cost savings, equipment maintenance reports, occupant satisfaction, or carbon emissions reductions. The real benefit is that as a tool for sustainability, an intelligent building delivers quantifiable energy, resource, and traditional sustainability metrics. It also delivers business improvements that keep executive decision makers committed and budgets lined up.

 

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