Navigant Research Blog

STEM Matters – Let’s Get Data Smart for Facilities Management

— November 9, 2017

November 8 was national STEM Day, and it was a great excuse to talk about career opportunities for the next generations of business leaders. The aging workforce is a strange phrase to hear in an era when there is a steady stream of conversation and study on the disruptive power of the millennial workforce. However, some important economic sectors face the real issue of diminishing employee pools. Let’s look at facilities management (FM) as an example: it faces the threat of an aging workforce, but also provides an opportunity for the focus on science, technology, engineering, and math (STEM) to change the course.

According to IFMA, less than 10% of its members are under 35 years old, and according to JLL, only 45% of millennials have heard of FM and less than 1% plan on a career in the industry. And just wait: next up is Generation Z—the students entering high school today who represent the real opportunity for shaping the future workforce through STEM. While only a hum of study on this group has occurred so far, a few signs suggest STEM can be a great avenue for channeling this generation’s profile, characterized in a recent Inc. article as realistic, independent, “digital natives.”

It is time to flip the switch. We need a new face for FM, and there are two side-by-side pathways the industry should explore to overcome the challenges of the aging workforce.

#1 – Excite the Digital Natives

The legacy caricature of a facilities manager is a middle-aged male with a clipboard and socket wrench. Today, the Internet of Things, analytics, and the digital transformation of building systems open the door to a new ideal for FM. An opportunity exists for the industry to redefine roles, titles, and influence in business to elevate the career path with a technology spotlight that can attract the next generation of employees. FM firms and corporate FM leadership can showcase how they are incorporating analytics into their operations strategy and how the data and insights illustrate the business value of best-in-class FM practices. There is a new frontier for FM as more intelligent systems become embedded and owners explore how smart facilities can become platforms for new business opportunities. The career path becomes exciting when a facilities manager becomes the data scientist for the digital building and has influence on projects like orchestrating energy consumption across a campus or portfolio to ensure power reliability or reach climate change mitigation goals.

#2 – Explore Business Models with Flexibility

The US Bureau of Labor Statistics estimates that today’s students will have 8-10 jobs by the time they are 38 years old. The question then emerges, What can companies, including FM services and corporate real estate firms, do to keep new talent focused on improving building operations and moving toward that vision of the digital building kind of business asset? The answer may be a partnership framework, with FM as a service capturing the attention and commitment of new talent demanding flexibility and work diversity. The nimble approach of the as a service model companies emerging in the intelligent buildings space aligns with the data-centric mindset of the digital native generation. These companies build a set of services off a software backbone offering. The opportunity is to infuse data science alongside domain expertise for FM. STEM can play a big role in helping to groom new employees for opportunities in this sector through its educational focus.


Winter Season Builds Business Case for Storage, Virtual Power Plants in California

— January 9, 2017

AnalyticsA little over a year ago, the underground Aliso Canyon natural gas storage facility began leaking. While the primary concern was how methane emissions might jeopardize public safety, this event also created a crisis in energy supply in Southern California. As it turns out, it became the largest methane leak in US history. By some estimates, the leak had a climate change impact equivalent to burning 1 billion gallons of gasoline. The value of the leaked natural gas has been estimated at more than $21 billion.

However, the leak from the gas field, which supplied fuel for a fleet of fossil fuel plants serving as one of the backbones of the regional power supply, also created an ideal market opportunity. The only way to fill in the gaps opened by the leak was through distributed energy resources (DER) that could be mobilized in short order. Among the innovative solutions are virtual power plants (VPPs) enabled by energy storage.

Distributed Solutions

The state moved swiftly. The California Public Utilities Commission (CPUC) made a bold decision, calling for a wide range of DER in late May. Fortunately, Southern California Edison (SCE) and industry providers were positioned to move fast, since contracts were already in place for over 260 MW of energy storage, 5 times the amount SCE had been required to purchase.

Last month, Stem was among the first vendors to deliver aggregated behind-the-meter, commercial-scale storage services. It was the first to pass eligibility tests for SCE’s local capacity requirements. The company has now dispatched the first of many distributed energy storage projects, all of which contribute to its forthcoming 85 MW fleet for SCE, arguably the largest mixed-asset VPP in the world.

The speed and scale for delivering products such as demand response (DR), energy storage, and VPPs are important, as the energy demands of the winter months place an extra burden on utilities for reliable energy supply across the country. Already, independent grid operators such as PJM are revising DR products in lieu of the shortage created by the so-called polar vortex 2 years ago. PJM’s new capacity performance product has created controversy, but its intent is to make DR a year-round resource. Integrating energy storage into such resources can help make that goal feasible. (Last December, the CPUC also strengthened its commitments to DER as a key solution set for year-round reliability.)

Ranking Vendors

Navigant Research released a Leaderboard report late last year ranking VPP software vendors. As an analyst, there is no better way to win friends (and create enemies) than to create a ranking of vendors. Another Navigant analyst wondered why Stem has not on the list. Needless to say, one could make an argument it belonged in the ranking; other vendors also protested their exclusion.

The truth of the matter is that the overlap is increasing between energy storage, DR, and VPP Leaderboards, so this latest ranking was limited to four energy storage firms in order to limit eligibility (with quotas also established for large technology vendors and pure-play software companies). Preference was given to those firms whose software managed onsite solar PV with batteries and loads at the distribution level and then aggregated these into VPPs. Stem is a VPP innovator, but its business model had focused more on demand charge abatement for commercial buildings without onsite distributed generation. Thanks to its abovementioned engagement with SCE, Stem is now certainly on my radar when it comes to VPPs and energy storage, joining a growing list of innovators.


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